The cryptocurrency industry in South Korea keeps facing regulatory challenges, and it seems that dust is far from settling. Now, crypto miners will be required to pay taxes, following the same path as digital assets traders.
Ruling to Take Place Starting 2022
According to a report published by Donga, miners should be accountable for paying taxes by deducting the amount from their earnings.
Expressly, officials from the South Korean Ministry of Strategy and Finance are set to apply a new rule for those who earn tokens over $2,220 annually by imposing a 20% tax rate.
However, regulators clarified that crypto miners would be able to deduct their electricity from the taxable income total in the filings, as those are considered as “necessary expenses.” An official from the Ministry of Strategy and Finance cited by Donga commented on the matter:
You have to prove how much you have mined the virtual currency by putting your computer in a specific place and how much the electricity bill came out.
Transaction fees from the total income will also be considered on the taxation scheme. Furthermore, digital asset miners in the country should submit their tax declarations every year in May, detailing the won value of the virtual currencies mined over the last financial year, the report said.
The new tax ruling could take effect starting next year in January.
Is the Crypto Taxation Becoming a ‘Hot Potato’ for the Government?
South Korea has been strengthening its stance towards imposing taxes on all crypto-related activities. As Bitcoin.com News reported early this year, the government will start taxing virtual currency trading profits in 2022 with a 20% tax.
But financial watchdogs have also been actively overseeing and detecting tax evaders who had not declared their crypto holdings in their submissions.
In fact, the Seoul metropolitan government recently seized digital assets worth $25 million from hundreds of investors who allegedly committed tax-related crimes.
Such conjuncture is being taken by some political parties to catch younger voters for the upcoming presidential elections, as the measures have sparked a negative backlash among that population in South Korea.