On the morning of the 18th, the Bitcoin price is displayed on the Upbit Lounge price board at a cryptocurrency exchange in Gangnam-gu, Seoul. [Image source=Yonhap News]
[Asia Economy Reporter Kim Bong-ju] As the price of Bitcoin reaches an all-time high, raising investors' expectations, starting next year, a 20% tax will be imposed on capital gains exceeding 2.5 million KRW.
According to the revised Income Tax Act, from January 1, 2022, 20% tax will be levied on the portion of income from virtual asset transfers or lending that exceeds 2.5 million KRW. For example, if you earn 10 million KRW from cryptocurrency next year, you will have to pay 1.5 million KRW in taxes, which is 20% of 7.5 million KRW after deducting 2.5 million KRW.
Additionally, inheritance and gift taxes must be paid when passing virtual assets to children.
Furthermore, if you sell virtual assets held currently next year and gain capital gains, it will be subject to taxation. However, capital gains realized within this year are not subject to taxation.
The purchase price is not the actual purchase price but the market price at 0:00 on January 1, 2022, which is considered the purchase price. The actual purchase price is applied only if the market price at 0:00 on January 1 is lower than the actual purchase price.
In the case of partial sales, the first-in, first-out method will be used for calculation. Gains are calculated by assuming that assets purchased first are sold sequentially. Even if foreigners earn profits through domestic virtual asset transactions, taxes will be paid through withholding by exchange operators.
Also, investors must report virtual asset-related taxes themselves. May is the reporting and payment period every year. If virtual asset income exceeds 2.5 million KRW annually but is not reported and is detected, a 'penalty for non-compliance in reporting and payment' will be imposed.
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