The Korean government will start taxation on cryptocurrencies on a full scale. It is said that the government does not regard virtual money as currencies or financial products subject to value added Tax (VAT) exemption but is positively considering imposing transfer tax or transaction tax on crytocurrencies in order to avoid double taxation controversy.
According to the government on December 18, the Ministry of Strategy and Finance will soon form a virtual money taxation task force (TF) team consisting of National Tax Service officials and Blockchain experts among others.
The TF team is planning to study what taxes can be levied on trade of virtual currencies such as Bitcoin and revise laws and regulations and prepare systems.
"Taxation on virtual money was already established," said an official of the Ministry of Strategy and Finance. "The TF team will draw up concrete plans based on overseas cases."
In the United States, the United Kingdom, and Japan, virtual currency is regarded as a means of payment so transfer tax is levied on virtual money transactions. Germany lays value added tax on them as the country sees cryptocurrencies as products. Lately, however, the European Court of Justice has decided to exempt Bitcoin from value added tax, it has become more likely that Germany will cease imposing value added tax on virtual currencies.
The Korean government is reportedly considering reviewing related legal grounds and systems, believing that it is possible to impose transfer income tax and transaction tax.
Meanwhile, the price of Bitcoin which had faltered since the announcement of the government's measures is surging again. The price topped 22 million won on December 17. The Chicago Mercantile Exchange, the world's largest derivatives exchange, began trading Bitcoin futures on December 18 so there is an increase in Bitcoin entering the market subject to systems’ control.