The regulation of the Blockchain industry globally is changing as we write this post at different levels. However, in this case we will talk about South Korea where the Blockchain Association (KBA) has requested that the new 20% crypto-asset trade tax plan be delayed for another two years.
On October 14, the Korean Blockchain Association (KBA) formally requested regulators to postpone the government’s implementation of its new tax strategy.
Specifically, they have asked for it to be postponed until January 1, 2023, that is, two years. Although they did not come out against the 20% tax measure, they believe that doing so now is too early.
Recently, four of the top five banks in Korea announced that they would introduce “cryptocurrency services.” Therefore, we can say that it is a growing industry within the Asian country.
What is the general idea of the new tax plan on the cryptocurrency industry?
Under the new tax plan, earnings made from cryptocurrencies and digital assets will be classified as taxable income, calculated annually.
Crypto asset income below $ 2,000 per year falls below the minimum threshold and will not be taxed. However, any income generated from trading cryptocurrencies above this threshold will be taxed at a fixed rate of 20%.
Why is the Korean Blockchain Association calling for this delay in the application of the new tax regulation?
According to the KBA, cryptocurrency exchanges and businesses in general in this sector require a “reasonable period” to prepare for the Income Tax Law.
For example, they have explained that as things are currently exchanges are expected to report their operations under the current tax code until September 2021. However, they are also asked that the new rules apply from October 1, 2021 .
This is the main argument of the KBA to ask the regulators a reconsideration of the decision. Thus, the Korean Ministry of Economy and Finance established that the revised code would begin to apply from the aforementioned date. This would make companies have to change their reports and so on in less than 24 hours.
Also, regulators may not immediately accept reports from cryptocurrency companies. Naturally, this creates uncertainty about whether they can continue operating in October. Modifications to existing tax law are likely to affect many crypto asset companies across the country.
Additionally, they argue that the industry is having many difficulties preparing for taxation. Companies are in a situation where it is uncertain whether they will be able to continue operating before the application of the Special Payments Law.
What did the KBA spokesmen say?
The president of the Korean Blockchain Association, Oh Gap-soo, gave some statements about it. He said that since it was the first time the government had been involved in taxing digital assets, a temporary suspension of the tax code might be necessary.
He added that: “It is necessary to provide a reasonable minimum period of preparation so that it can contribute to the national economy and ensure tax collection in the long term.” Therefore, it does not mean that they are not in favor of taxes on cryptocurrencies, but that they need adequate conditions to do so.