National Tax Service Conducts Consulting with Domestic Exchanges Ahead of Virtual Currency Taxation

Guidance on Related Procedures for 28 Entities on 25-26th... Some Exchanges Say "Preparation Time Is Tight"

[Sejong=Asia Economy Reporter Kim Hyunjung] With virtual currency taxation about two months away, it has been confirmed that the National Tax Service conducted consulting sessions targeting domestic virtual currency exchanges.

According to industry sources on the 27th, the National Tax Service held taxation-related consulting sessions over two days starting from the 25th, inviting 28 out of 29 domestic virtual currency exchanges that have completed registration with the Financial Services Commission. The participating companies included 24 exchanges operating coin markets and 4 exchanges operating won markets.

During the consulting, the National Tax Service announced, "From January 1 of next year, taxation on virtual currency (profits) will be implemented," and provided guidance on related procedures. The consulting focused on how to prepare the virtual asset statement according to the Income Tax Act and the procedures for submitting it to the authorities.

The National Tax Service also conveyed the policy that assets for which the acquisition cost cannot be proven will be calculated as having an acquisition cost of 0 won. For example, if it is difficult to prove how much was paid when transferring virtual currency stored in a personal electronic wallet to a specific exchange, the asset itself will be regarded as income and taxed accordingly. Some have anticipated controversy over this policy, citing the tight preparation time.

It is also known that the National Tax Service already conducted a taxation consulting session at the end of July targeting the 'Big 4' exchanges?Upbit, Bithumb, Coinone, and Korbit?that have secured real-name verified deposit and withdrawal accounts (real-name accounts).

From next year, investors will have to pay taxes at a 20% rate on profits exceeding 2.5 million won earned through virtual currency. In the political arena, Assemblymen Yoon Changhyun, Yoo Kyungjun, and Jo Myunghui (all from the People Power Party), and Assemblyman Noh Woongrae (from the Democratic Party) have proposed amendments to the Income Tax Act to postpone virtual currency taxation. Hong Namgi, Minister of Strategy and Finance, recently expressed a negative stance on postponing the taxation timing during the national audit and other occasions.