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The South Korean tax body has announced plans to start taxing crypto gifts and inherited tokens – although taxes will need to be paid in fiat using complicated-sounding methods. And Seoul has also announced that it will intensify its crackdown on crypto market manipulation.
According to KBS and the Donga Ilbo, the National Tax Service (NTS), the nation’s top tax body, has announced that as of January 2022, citizens will be obliged to pay tax on crypto they are either gifted or inherit from family members or acquaintances. The plan will be rolled out in spite of the fact that the National Assembly recently imposed a delay on crypto trading profits that means investors can trade tax-free until at least 2023.
In order to help taxpayers fulfill their new legal duties for crypto gifts and inheritances, the NTS announced that it would add a new tool to its website. That widget will allow individuals to calculate how much they owe the taxman when they get a crypto windfall.
The tool will use token price data provided by the “big four” crypto exchanges – Upbit, Bithumb, Korbit, and Coinone – to calculate the fiat worth of a token donation. But rather than using crypto prices at the time of inheritance or token receipt, citizens will be forced to use the tool to create a two-month average price. The NTS is concerned that token prices are volatile, and appears worried that shrewd investors may seek to make gifts when prices dip to avoid potentially heft tax bills.
Although the body did not explain exactly what time period these two-month average prices were expected to cover, it is likely that the period will cover the month before receipt, as well as the 30-31 days following.
Meanwhile, the South Korean government also wants to crack down on crypto market manipulation. Last month, it unveiled a draft bill calling for life sentences for those convicted of high-level fraud that involved manipulating token prices.
And per iNews24, 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 this week held a meeting to “check the status of virtual asset service providers (VASPs)’s compliance” to the recently imposed Virtual Asset Industry Act.
The government said that as “suspicions of unfair trade practices by some virtual asset business operators related to the listing of virtual assets” had been raised, it was “necessary to respond.”