South Koreans To Pay Taxes On Crypto Gifts And Inheritances

south korea tax on crypto

Individuals in South Korea who give crypto gifts or inherit crypto assets such as digital tokens will now have to pay taxes, the country’s tax authority has said.

However, the taxes will have to be plaid in fiat through methods that appear to be quite complicated. South Korean authorities will also crack down harder to prevent manipulating the crypto market.

Starting in January of 2022, South Koreans will be mandated to cough up tax on crypto that they have either gifted to someone or have acquired such assets through inheritance from family members or an acquaintance, according to reports published in news outlets KBS and the Donga Ilbo, the National Tax Service (NTS), the nation’s top tax body has said.

The government is bent on imposing this new tax even though a delay in taxation on crypto trading profits was imposed recently by the National Assembly of the country. That would have meant that crypto investors could trade in crypto without paying taxes until at least 2023.

A new tool to its website would be added by it, said the NTS, to aid taxpayers to fulfill the new legal duties for crypto gifts and inheritances by those who come under its purview. Using that widget, it would be possible for eligible South Koreans to determine how much in tax they owe to the taxman when they make any profit from a crypto transaction.

To compute the fiat value of a token gift, the tool will leverage data from the “big four” crypto exchanges – Upbit, Bithumb, Korbit, and Coinone. Citizens will be obliged to use the program to calculate a two-month average price rather than using crypto prices at the inheritance or token reception. The NTS is concerned about the volatility of token prices and appears to be afraid that savvy investors may try to make gifts when Prices fall to avoid potentially large tax obligations.

Although the organization did not specify what period these two-month average rates were supposed to cover, it is likely to include the month before receipt and the 30-31 days following.

South Korea’s government, meanwhile, wants to crack down on cryptocurrency market manipulation. Last month, it presented a draught bill proposing life imprisonment for those convicted of high-level fraud, including token price manipulation.

According to iNews24, a meeting was held this week between the Financial Services Commission, the Personal Information Protection Committee, the Ministry of Strategy and Finance, the Ministry of Justice, the National Police Agency, and the NTS to “check the status of virtual asset service providers (VASPs)” compliance” with the recently enacted Virtual Asset Industry Act.

The government stated that it was “essential to respond” because “suspicions of unfair trade practices by some virtual asset company operators relating to the listing of virtual assets” had been raised.
The parties decided to raise their monitoring of “unfair practices” and provide “legislative support” to “control and punish” any offenders.

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