A Double Blow to South Korean Exchanges
South Korean cryptocurrency exchanges have been dealt a double blow by the country’s government, with regulations in the pipelines – and higher tax bills also heading their way.
The Ministry of Strategy and Finance confirmed that it was drawing up long-awaited regulations. Although South Korean exchanges have previously welcomed talk of regulations, they may be a little concerned by the ministry’s choice of words – officials spoke of drafting “cryptocurrency countermeasures.”
Per media outlet Financial News, the ministry stated, “We are still in the process of preparing countermeasures for [cryptocurrencies] in conjunction with the rest of the G20. It is a matter that we are continuing to look into and actively discuss.”
Kim Dong-yeon, the finance minister and the country’s Deputy Prime Minister, also confirmed that the government is set to amend a law pertaining to the way exchanges pay income tax and corporate tax.
Currently, most exchanges have been eligible for classification as small and medium-sized companies, and are thus eligible for special business-fostering tax breaks. Qualifying companies can avoid paying between 50% and 100% in both income tax and corporate tax for their first five years. Older companies are currently eligible for tax discounts of up to 30%.
However, Kim confirmed that the government will seek to end to exchanges’ tax breaks, claiming exchanges do not generate sufficient “value” to justify continued exemptions.