Income from Cryptocurrencies to be Taxed from October Next Year

The Korean government will impose a 20 percent tax on income from cryptocurrencies from October 2021.

The South Korean government announced tax law changes on July 22, which include taxation on income derived from virtual asset trading. The income will be classified as other income and annual separate taxation will be applied with a tax rate of 20 percent. The tax will be imposed when the annual income exceeds 2.5 million won and the taxation is scheduled to become effective in October 2021.

The United States and Japan already introduced taxation on virtual assets. In the United States, income from virtual assets is classified into ordinary income and capital income based on a reference period of one year and tax rates of 10 percent to 37 percent and up to 20 percent are applied to the ordinary income and the capital income, respectively. In Japan, the same income is subject to a tax rate of 15 percent to 55 percent.

In South Korea, this year’s average daily virtual asset trading volume is 760.9 billion won and the volume totaled 2,161 trillion won from 2015 to May this year. The daily average is slightly less than 10 percent of the average daily trading volume of KOSDAQ for the same period.