The South Korean tax authority has announced plans to tax crypto gifts and inherited tokens, albeit the taxes will have to be paid in fiat currency.
According to major South Korean media outlets such as KBS and the Donga Ilbo, the nation’s top tax body, the National Tax Service (NTS), has said that citizens in South Korea will be required to pay tax on cryptos they are given or inherit from family members or friends beginning in January 2022, according to the country’s tax authority.
Even though the National Assembly has imposed a tax delay on crypto trading profits, investors will be able to trade tax-free until at least 2023, when the proposal will be implemented.
What you should know
The NTS announced the addition of a new tool on its website to assist taxpayers in fulfilling their new legal obligations for crypto gifts and inheritances. When someone receives a cryptocurrency windfall, they can use this widget to figure out how much they owe the IRS.
To compute the fiat value of a token gift, the tool will leverage data from the “big four” crypto exchanges – Upbit, Bithumb, Korbit, and Coinone.
Citizens will be obliged to use the program to calculate a two-month average price rather than using crypto prices at the time of inheritance or token reception.
The NTS is concerned about the volatility of token prices and appears to be afraid that savvy investors may try to make gifts when prices fall to avoid potentially large tax obligations.
Although the organization did not specify what period these two-month average rates were supposed to cover, it is likely to include the month before receipt as well as the 30-31 days following.