South Korea and Thailand move to regulate and tax Crypto by mid-year 2018 following earlier stumbling blocks.
South Korea, Thailand are only two of the latest countries in a long list of governments which announced their intention to regulate and tax cryptocurrencies.
South Korea
Owing to the large interest in cryptocurrencies among locals, South Korea was initially hailed as a potential haven for cryptocurrencies and related businesses in the light of China’s crackdown on all things crypto. It is estimated that South Korea is the third most important virtual currency market in the world, with a number of researches suggesting that “at least 3 out of 10 workers have invested in cryptos an average amount of 5.6 million Yuan.” However, domestic political turmoil and disagreement among politicians as to the future treatment of cryptocurrencies and digital currencies led to a rather unstable environment for cryptocurrencies earlier this year.
However, the South Korean Government has recently announced that it shall implement a system to regulate and tax cryptocurrencies by July 2018 following the country’s general elections which shall take place on 13th June.
CNN reports that South Koreas Ministry of Strategy and Finance is currently looking into the establishment of a “crypto adopters’ capital gains tax and other income taxes,” and is particularly forced on “levying a tax on profits generated by the sale of cryptocurrencies.” According to a report, an amendment will need to be introduced to the local income tax law in order to include income accruing from a virtual currency transaction among the categories of taxable objects. South Korean Government officials noted that several states including the US and the UK which tax cryptocurrencies as capital gains and other countries which tax cryptocurrency transactions as miscellaneous taxable objects such as Germany and Japan, however in practice few transactions are ever taxed in such cases, as opposed to cases where transactions are subject to tax on income.
Thailand
The Thai Ministry of Finance announced its intention to regulate and tax cryptocurrencies on the 27th March, 2018.
Coinspeaker reports that the new laws on cryptocurrencies and digital tokens shall cover all crypto trading and investing practices, and that a 7% value-added tax on all crypto trades and a 15% capital gains tax on the returns will apply.
Korn Chatikavaniji, Chairman of the Thai Fintech Association has expressed the group’s concern that regulators, which tend to take a rather conservative approach to regulations, may risk driving away Thai Virtual Currency start-ups to more investor-friendly jurisdictions such as Singapore.
Our Fintech Practice
Our lawyers and financial services specialists at Chetcuti Cauchi Advocates provide bespoke solutions to clients by combining the traditional legal fabric with new technologies. Our Fintech practice strives to assist clients in this burgeoning and evolving sector of law, which is set to reshape the financial services sector as we know it.
Should you be interested in the setting up of a DLT company or a cryptocurrency exchange in Malta, or alternatively would like to set up a Crypto Fund in Malta, we welcome you to get in touch with our specialists.
