It has been speculated that cryptocurrency related small firms in South Korea might have to give away with the tax benefits derived from Cryptocurrency exchanges. It might be a cause of concern for several cryptocurrency based small size firms.
A new regulation was passed by the South Korean government in the tax law on Monday which demanded a revision of the existing policy. As per the rule, startups or small and medium enterprises (SMEs) which can claim a tax benefit of up to 100 percent will hence forth not be eligible for seeking benefits from Cryptocurrency exchanges. The proposition will be presented to the National Assembly by Aug 31 for parliamentary debate. The final decision on the updated legislation will be taken at the time of the debate.
The Korean government is of the opinion that crypto platforms fail to justify the benefits derived stating that “cryptocurrency transaction brokerage is not effective in generating added value.”
Current situation in Korea
As per the current law prevailing in the country, nearly 50–100 percent can be claimed by the startups and SMEs for a deduction from the income tax or corporate tax in the first five years after their establishment. Thereafter the percentage would fall down in between 5–30 percent.
It was also reported that sometime in the month of May, the government expressed their willingness to establish a cryptocurrency taxation system for investors. The South Korean Government has many other legislative efforts in the pipeline which would address various aspects of the crypto industry.