The government of South Korea is seemingly taking a calculative approach towards the crypto industry, ensuring not to pressurise it in its current nascent stage. The Asian nation has decided to delay the imposition of a 20 percent tax on crypto earnings till 2025, unlike India, that enforced a costlier tax regime on virtual digital assets (VDAs) earlier this year. The development comes at a time when several nations from around the world are consulting the public and financial authorities in order to formulate crypto rules that ensure the safety of their investors, as well as their respective existing financial systems.
South Korea announced its 2022 tax reform plan on Thursday, July 21, in which the authorities said that taxation on income from virtual assets as well as income from the “transfer or lending of virtual assets” will be delayed by three years.
While Seoul is taxing not all crypto incomes for now, its initial plan to levy a 20 percent tax on yearly crypto gains exceeding $1,900 (roughly Rs. 1.50 lakh) remains unchanged, a CoinDesk report noted.
Meanwhile, in India, crypto traders are struggling to see profits after paying a 30 percent tax on transactions of VDAs. This rule went live in April.
Starting this month, Indians have also begun to see one percent tax deductions on each crypto transaction. This essentially means that one percent TDS is being levied on every purchase and deposit of crypto assets, thus increasing the pressure on investors.
South Korea is however, not looking to pull public interest away from the crypto industry.
The crypto market in South Korea touched the valuation of $46 billion (roughly Rs. 3,66,318 crore) by the end of 2021, with the number of users reaching nearly 5.58 million or around 10 percent of the country’s population, as per a study by South Korea’s Financial Service Commission.
Its largest network provider, SK Telecom is currently creating a crypto wallet, powered by advanced Web3 capabilities.
Not just the crypto industry, but the Asian tech hub is also exploring ventures in the metaverse industry.
The government of South Korea is planning to invest over $177 million (roughly Rs. 1,372 crore) in supporting metaverse projects that will also trigger job opportunities in the sector. The country is betting on the “indefinite potential”, it believes, the metaverse industry holds.
In fact, in a bid to safeguard its crypto investors against industry mishaps and scams, South Korea’s Financial Supervisory Service (FSS) has decided to take on the mantle of analysing the risk characteristics of domestic virtual assets as a way to manage risks in the virtual asset market.
The FSS plans to entrust research services to institutions with public trust in order to analyse the risk characteristics of domestic virtual assets.
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