Korean National Tax Service Plans Crypto Taxation, Might Seek Data from Exchanges
The Korean National Tax Service is looking into ways to tax cryptocurrency gains and may seek user data from exchanges like the IRS did with Coinbase.
According to Business Korea, the country’s National Tax Service (NTS), seems to be gearing up for taxation of cryptocurrencies – a topic under discussion at the 2017 National Tax Administration Forum this week.
Speaking at the Forum, which was sponsored by the NTS, a Kangnam University professor commented on the lack of taxation structures for digital currencies and recommended a thorough examination before drafting specific tax rules to prevent tax evasion:
“There are no unified tax bases on cyber money by country and there are various taxation issues as the legal characteristics determine whether or how much to impose taxes like a value added tax.
After examining thoroughly the legal characteristics of virtual currencies and related taxation trends in other countries, the government needs to specifically set up a detailed tax standard and introduce the exchange registration system and identification system in order to prevent tax evasion.”
While Bitcoin buyers, holders and users are enjoying the ride as it surpassed even the $13,000 barrier this week, the essence behind cryptocurrency is control over personal finances and privacy of transactions – elements world governments aren’t very supportive of.
As media hype around cryptocurrencies grows, an increasing number of people are investing in them, and given their largely anonymous nature, governments are concerned about the illegal use of money as well as tax evasion.
Recently we also reported about the United States Internal Revenue Service requiring the country’s largest Bitcoin exchange – Coinbase – to share details of 14,000 customers so that the tax authority can get a picture of their cryptocurrency gains. The judge ruling over the case validated the tax authority’s interest in obtaining these records, saying, “the IRS has a legitimate interest in investigating these taxpayers”.
Commenting on Korea’s plans, an official from the NTS said:
“The basic principle is to tax the income. It is important to collect detailed history data like who made transactions and how in a bid to impose taxes. To this end, we are considering the improvement in systems.”
This implies that the country’s tax authority may also take the route IRS took with Coinbase, asking cryptocurrency exchanges to hand over customer details and trading data. As Bitcoin rises higher and the cryptocurrency market grows, we can expect more countries to take a similar approach to ensure that crypto gains are taxed.