On July 22, Korean government announced the tax law amendment that will be applied next year. The government said that profit gained from virtual assets will be classified as “other income according to international accounting standards and current income taxation system.”

Considering that the basic tax rate is 20% for other income subject to separate taxation and capital gains, virtual asset tax rate will also be 20%. The amount of the virtual asset profit is determined by subtracting the value of the transfer price (market price) from the acquisition price (the proven cryptocurrency price held by the investor prior to the enforcement of the law) plus the additional cost.

However, if the profit gained of virtual assets is less than 2.5 million won per year will be tax free. The government will separate taxation of virtual assets from taxation upon total income. Taxpayers are obligated to report and pay virtual asset profit tax once a year in May.

For non-residents and foreign corporations in Korea, virtual asset income will be taxed and withheld as “other income from domestic sources”. A virtual asset provider that pays the non-resident or foreign corporation for the transfer of the virtual asset must withhold the tax amount and pay it to the customs. The withholding tax amount is derived by multiplying the transfer amount by 10% or the transfer margin by multiplying by 20%.