The South Korean government recently announced their intention to impose a tax on cryptocurrency, leading to backlash. Korean Yonsei University economist, Sung Tae-yoon, warned that the decision to tax crypto capital gains may slow the technology’s emerging market, according to Koreatimes on June 21.
Sung said that taxing the crypto market while it is still in its infancy is a “premature” decision. He worries that tough regulations or taxation may prevent the crypto industry from flourishing in South Korea. He also believes:
“Cryptocurrencies cannot be considered a universal asset like traditional paper currencies.”
Reasons behind the act
Opposition economists, such as Kim Jin-ill from Korea University, believe regulation is essential, even when it blocks new market growth. However, some critics argue that the government is imposing new taxes due to fiscal uncertainty caused by the COVID-19 pandemic.
According to the news, the government has plans to tax more than just cryptocurrency. They quoted the Korean Finance Minister, Hong Nam-Ki, who said:
"By reforming the taxation system this year, we are going to consider introducing new types of taxation, such as digital tax[...] The digital tax refers to an additional tax imposed on overseas IT companies ― such as Google and Amazon ― for their online business activities.”
As Cointelegrah reported previously, Portugal became a crypto regulation friendly country that has zero taxes for crypto traders and miners.