South Korea Financial Regulator May Impose Tax On NFTs

Nov 25, 2021 | Bitcoinist News | 0 comments


Amid the ongoing controversy surrounding virtual asset taxation in the country, South Korea’s Financial Authority recently proclaimed non-fungible tokens (NFT) as taxable. On Tuesday, The Financial Services Commission (FSC) of South Korea, announced that it would start taxing NFTs.

According to The Korea Herald, from January next year, this tax law amendment would impose a 20% tax on income from virtual assets that exceed 2.5 million won ($2,102).

Proposed Tax On NFTs

Vice-Chairman of the FSC, Doh Kyu-sang, said that NFTs are virtual assets under the current Act on the Specified Financial Transaction Information. And therefore, the government is entitled to collect taxes on them. “Under the law, any income earned from purchasing and selling virtual assets is subject to “other incomes” and subject to taxation.”

Related Reading | Crypto Exchanges Distancing From South Korea Ahead of Stricter Regulations

The FSC’s announcement, however, differs from its earlier statement. A guidance report from the Financial Action Task Force (FATF) stated that “NFT, or crypto-collectibles, depending on their characteristics are generally not considered to be [Virtual Assets].” Based on this guideline, the FSC publicly stated that it would not regulate NFTs.

Finance Minister Hong Nam-ki also said last month that there was still some uncertainty about whether or not NFTs fall under virtual assets. His opinion was, “NFTs do not belong to virtual assets yet.”

Park Sung-Joon, head of Blockchain Research Center at Dongguk University, spoke on the contradiction.
“In the situation where the financial authorities are contradicting each other, it is confusing for market players of virtual assets to know whether they must pay taxes or not,” he said.

He also compared the proposed tax on NFT to the tax rates of real assets. According to the law, owners of virtual assets must pay a 20% tax on all NFT income above 2.5 million won. In comparison, owners of actual paintings pay a 22% tax on income above 60 million won.
According to Park, if the authorities must impose taxes on NFTs, the rates should be similar to real assets. There is no reason for heavier taxation on NFTs.

Crypto Tax In South Korea

The South Korean NFT tax law follows the same trails as the proposed tax on cryptocurrencies. In 2020, lawmakers came up with controversial taxation on income from investing in cryptocurrencies.

Related Reading | Crypto Cards Arrive In Australia. What Are The Tax Implications?

Similar to the NFT tax law, this law also imposes a 20% levy on cryptocurrency gains above 2.5 million won. The law was to take effect from January 2022. However, lawmakers from The opposition People Power Party are pushing for a one-year extension. They are also advocating for tax rates adjustment in line with the proposed Financial Investment Income Tax regime.

Featured image by Skeli on Unsplash

News Source from

Related Articles

Tanzania Central Bank Reportedly Prepares To Launch CBDC

Tanzania Central Bank Reportedly Prepares To Launch CBDC

Tanzania has reportedly started exploring a Central Bank Digital Currency (CBDC). The country is following the footsteps of Nigeria, which launched its own digital currency last month. Other African countries have similarly announced plans to launch CBDCs. Tanzania...

Hacked cloud accounts are being used to mine crypto, says Google

Hacked cloud accounts are being used to mine crypto, says Google

A report released this week by Google indicates that a majority of recently attacked accounts on its Google Cloud Platform service were used to mine cryptocurrency. The Threat Horizons report for November stated that "[m]alicious actors were observed performing...

Ethereum L2 Scene Heats Up With Boba Network Taking Second Spot in TVL

Ethereum L2 Scene Heats Up With Boba Network Taking Second Spot in TVL

Boba Network, a recently released L2 layer for Ethereum, has quickly jumped to second place in TVL (total value locked) among all expansion layers. Boba, which is a fork of Optimism, another L2 layer based on rollups, reached more than $1 billion in TVL, surpassing...

Pin It on Pinterest

Share This