The Road to Exempt Small Crypto Transactions From Taxes Continues
South Korea tends to closely monitor how advanced countries approach their cryptocurrency laws to a degree where the Korean Government adopts similar regulatory bills.
One of the countries that South Korea is watching closely is the US. This past January, US Congress saw another bill submitted to free crypto spenders from a duty to report capital gains on crypto used in personal transactions. The bill itself is called “The Virtual Currency Tax Fairness Act of 2020,” and would establish an exemption for virtual currency expenditures that qualify as personal transactions. Users would then not have to report instances when they spent crypto whose valued had changed relative to the U.S. dollar on day-to-day expenses.
Existing tax law struggles to cope with cryptocurrencies, as they sometimes behave as investments, sometimes commodities, and sometimes just like other currencies. It is to this last type of transaction that the bill looks to simplify for crypto traders and users.
The current problem and the earlier bill
Currently, the IRS could hold crypto users responsible for paying taxes on gains earned and realized unknowingly, based solely on the value of their crypto at a time of purchase. Such a system would make use of crypto as currency incredibly cumbersome within the U.S.
The newly reintroduced bill would exempt taxpayers from a reporting duty as long as the gains involved are under $200, which would generally only apply with major purchases or wild bull markets. The earlier version of the bill put this number at $600.
The bill would insert a new category within existing IRS exclusions from classification as gross income.
What about Korea?
Currently, there aren’t any tax laws present neither for individual users nor the operating exchanges in South Korea.
The South Korean government attempted to draft legislation to tax individual crypto profits at the beginning of the year. Since individuals’ profits from virtual currency transactions are not listed as income, these earnings do not fall under income tax taxation.
This May, South Korea’s Ministry of Economy and Finance started to prepare an amendment to apply to the nation’s Income Tax Law. This could include rules for profitable sales of cryptocurrencies as well as profits from national crypto mining projects. However, crypto-to-crypto transactions, such as Bitcoin (BTC), will be “likely” exempt from the proposed amendment and only seeks to tax-for-profit transactions and not loss-making ones.
What’s Next?
As it’s been over half a year since the proposed US bill ‘The Virtual Currency Tax Fairness Act of 2020’ been introduced, little progress has been done so far.
Will the South Korean Government wait for US to pass the bill or will it more forward by introducing its own reforms, we will just have to wait.
https://cointelegraph.com/news/south-korea-is-exploring-new-crypto-tax-laws
