South Korean Crypto Exchanges May Soon Lose Tax Benefits
The South Korean government may soon stop providing significant tax benefits it grants to cryptocurrency exchanges and other small startups.
The South Korean government has proposed a revision to the current tax law in the country, according to which, cryptocurrency exchanges would no longer be categorized under the category of small and medium enterprises (SMEs) and startups, rendering them ineligible to claim a tax cut of up to 100 percent.
As per the existing tax law in South Korea, startups and SMEs are eligible to claim tax benefits which include deduction of up to 100 percent of their corporate or income tax during the first five years of their commencement, and about 5-30 percent after these five years.
However, the government is now of opinion that crypto transaction brokerage is not at all effective in generating added value, and therefore the crypto platforms should be devoid of these tax benefits.
The National Assembly will be presented a draft revised bill by August 31 for a parliamentary debate on the proposed revision to decide whether the proposed legislation should take effect.
However, the government doesn’t plan on depriving blockchain startups of these benefits. The government indicated that blockchain startups working on research and development in the country could also be eligible to claim tax benefits – a move which shows the government’s interest in promoting emerging technologies in the country.
In May, the South Korea government announced that it would establish a crypto taxation system for Korean investors.
Several other legislative efforts to deal with aspects of the crypto industry are in the works too, with a senior executive calling for regulations in the industry with urgency.
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