South Korea to tax cryptocurrency exchanges at 24.2%
Hundreds of millions of reasons to encourage cryptocurrency growth.
Local government officials in South Korea are planning to tax most cryptocurrency exchange profits at 24.2%, taking a considerable bite from the bottom line, according to a report from Yonhap News.
This isn't a new law, but represents an application of current tax laws which require all businesses with annual income over 20 billion won (US$18.7 million) to pay 22% corporate tax and 2.2% local tax on their income.
Virtual currency exchanges should pay the corporate tax on income earned last year by the end of March and the local income tax by the end of April, a government official told Yonhap News.
Most of South Korea's largest cryptocurrency exchanges by volume will almost certainly cross the $18.7 million tax threshold.
Bitthumb, the second-largest exchange in the country by volume, estimated 317.6 billion won (US$300 million) in income for the year 2017, according to Yujin Investment & Securities. Of that, only about US$47 million was taken in the first 7 months of the year, showing the remarkable growth of cryptocurrency towards the end of the year.
Only Upbit had higher volume, listing a turnover of up to US$4 billion per day, slightly higher than Bitthumb's $3.93 billion per day. Bithumb alone is expected to pay about 60 billion won (US$56.4 million).
Clear taxation laws for exchanges might be an important part of spurring cryptocurrency's broader acceptance. South Korea's tax office now has hundreds of millions of new reasons to look forward to tax day, which might start shaping other cryptocurrency legislation in South Korea and beyond.
A lot of people might not be looking forward to paying tax on enormous profits, but it might be a welcome change from the fear, uncertainty and doubt that's been emanating from South Korea in recent weeks.
At the same time, Australia has assembled an ATO cryptocurrency task force, and Belarus made the startling – and perhaps highly motivated – decision to completely tax exempt almost all crypto activities for 5 years.