"In Cases Where the Taxation System Is Not Fully Established, Forcing Taxation May Create Taxation Blind Spots"
[Asia Economy Reporter Gong Byung-sun] On the 16th, Roh Woong-rae, a member of the Democratic Party of Korea, criticized the Ministry of Economy and Finance's (MOEF) plan to tax virtual currencies next year as an administration ignoring reality.
Rep. Roh stated, "The postponement of virtual currency taxation should be decided through legislation, not by obtaining permission from the MOEF," and added, "If the government forcibly enforces taxation next year despite the tax system not being fully prepared, it will undermine the government's credibility and only encourage tax evasion." On the 15th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said during a government questioning session, "From the perspective of fairness, virtual currency taxation should be implemented starting next year."
According to current law, income from virtual currencies will be classified as other income starting next year. However, concerns have been raised that a tax blind spot may occur due to difficulties in securing tax data on transactions between overseas virtual currency exchanges or between individuals. Additionally, there have been criticisms that classifying such income as other income, which is imposed on incidental and temporary income like art transactions, is inappropriate.
On July 6, Rep. Roh introduced a bill to postpone the taxation of virtual currencies by one year and to classify related income as financial assets to reduce taxes. The bill is currently pending in the standing committee.
Rep. Roh said, "Postponing virtual currency taxation is already an inevitable situation given that the taxation infrastructure is not sufficiently prepared," and added, "The outdated judgment to tax virtual currencies like art transactions must also change." Furthermore, he emphasized, "Since the related laws on tax postponement and substantial tax reduction are currently pending in the standing committee, I will actively persuade my fellow lawmakers to ensure they are processed within the regular session of the National Assembly."
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