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Wednesday, October 18, 2023

NFT Tax & ‘Practical Difficulties’ with Crypto Tax In Spotlight In S Korea

Source: Adobe/Nuthawut

South Korean MPs have spoken yet again about the need to tax the non-fungible token (NFT ↗) sector, while the government is being best on all sides by challenges from MPs opposed to its controversial ↗ tax plans.

As reported ↗ earlier this week, the Finance Minister and Deputy Prime Minister Hong Nam-ki insisted that the much-maligned 20% levy on crypto trading profits over the annual threshold of USD 2,100 will go ahead in January next year when quizzed on the matter by the National Assembly’s Planning and Finance Committee.

Hong noted that Seoul was also “considering” proposals to tax NFT sales.

But, on Friday, it was the turn of the committee, News1 reported ↗, with the opposition People’s Power MP Yoo Kyung-jun expressing “concern” about the NFT industry, stating that current rules made it “unclear whether NFTs were to be included in cryptoasset” tax calculations, a fact “that could lead to tax evasion,” he said.

And it was also the turn of Kim Dae-ji, the head of the National Tax Service (NTS), to face a grilling on the matter of crypto tax at the hands of the committee’s MP members.

Kim was challenged with questions about how the NTS would deal with thorny crypto-related issues. One MP gave the theoretical example of a case whereby a South Korean crypto trader bought cryptoassets worth “around USD 8,000” on an American exchange, only to move the tokens to a domestic exchange and witness the price climb to double that amount in the space of a year – and eventually sell them for fiat for three times the original amount the following year.

A ruling Democratic Party MP asked how the NTS would enforce its tax policies in cases such as these. Kim replied:

“There are practical difficulties as to how [to calculate] acquisition prices. But we will manage to [find a way to do this] without any setbacks by hiring new staff, creating a digitized system and collecting transaction data.”

An MP also claimed that the NTS was underprepared for the task of taxing crypto – and pointed out that the tax service could not even decide what to call tokens, remarking that “the NTS uses terms ‘virtual assets’ and ‘cryptocurrency’ interchangeably.”

“The tax law requires taxpayers to report their cryptoasset transactions over the course of the financial year as of next May, but I am well aware that there are practical difficulties involved,” Kim concluded by saying.

James Mackreides
James Mackreides
'Mac' is a short tempered former helicopter pilot , now a writer based in Sofia, Bulgaria. Loves dogs, the outdoors and staying far away from the ocean.

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