Conflicting announcements by authorities creates confusion in South Korea

The government with its conflicting announcements over the crypto tax possible amendment, have resulted in a confusion flood in South Korea.
The government with its conflicting announcements over the crypto tax possible amendment, have resulted in a confusion flood in South Korea.

The government with its conflicting announcements over the crypto tax possible appeal or amendment, have resulted in a confusion flood in South Korea this year. The crypto tax is gearing up to be in effect from 2022.

South Korea’s legislature, National Assembly, has witnessed an intense debate throughout 2021, over whether, or how, revise and improve the current crypto tax. 

In January last year, as TheCoinRise reported, the South Korean government hinted at the tax imposition on crypto profits. The upcoming crypto tax system says that a 20% tax deduction would happen from the income generated above 2.5 million Korean won (around $2,100), in between crypto transactions from the start of 2022.

However, the government is considering amending the highly awaited crypto tax system due to the reported possibility of tax evasion. It has recently warned the investors in the country of severe consequences against crypto tax evasion

South Korea can’t decide NFTs classification

One of the biggest reasons behind the confusion over the crypto-assets is the NFT regulations. The latest guidelines released by the Financial Action Task Force (FATF) on October 28 classified NFTs differently from cryptocurrencies. It said that NFTs are not considered to be virtual assets and hence will have zero regulations on them.

The confusion arose when South Korea reversed its decision on November 23. Do Gyu-sang, FSA Vice Chairman stated:

“The Ministry of Strategy and Finance is preparing tax provisions for NFTs under the Special Reporting Act.”

Because the stated policy approach seems to change so rapidly, some South Korean investors are doubtful that the government is looking out for the crypto industry’s best interests. 

Several efforts to postpone the tax regime from the Democratic Party, which has a majority in the legislature, had gathered traction in the National Assembly since April 2021, until they were quashed by Finance Minister Hong Nam-ki of the opposition People’s Power Party

The increased regulatory activity brings more attraction to the crypto world and crypto taxes on Infrastructure bill has been one of the hottest topic in 2021.