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South Korea’s new crypto tax law, effective January 2025, exempts personal exemptions from increased tax burdens. The law includes income tax on residents, withholding tax on non-residents, and gift tax on virtual assets. Personal tax credits remain unchanged for those earning over KRW 1 million annually from crypto investments. South Korea’s cryptocurrency investors can breathe a sigh of relief as the government has delayed the implementation of new virtual asset tax regulations until January 2025. The new rules, which were initially planned for early 2023, have been pushed back to address concerns about their impact on individual investors’ tax burdens and to clarify certain aspects of the regulations. This update addresses concerns that investors’ capital gains from crypto assets could increase their tax burden. However, it has been clarified that income from crypto investments, categorized as “other income subject to separate taxation,” will not influence personal tax credits. The new rules cover several tax types: gift tax for residents, income tax for individuals, withholding tax for non-residents and foreign companies, and corporate tax for local  corporations. This delay mainly affects the income tax on resident individuals and the withholding taxes on non-residents and foreign companies.  Under current laws, gifts of virtual assets are subject to gift tax. The value of these assets, traded on the four major exchanges in Korea, is averaged over a period surrounding the gift date. This tax can be levied within ten years, extending to fifteen years in cases of non-filing or fraud. While there are debates about whether non-fungible tokens (NFTs) should be considered virtual assets, they are likely subject to gift tax due to their classification as properties or gains. Income tax in Korea is imposed on incomes listed in the Income Tax Act. The Act was amended on December 29, 2020, to include…

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Filed under: News - @ July 6, 2024 6:02 am