Korean legislators now plan to impose taxes on nonfungible tokens NFTs after classifying them as virtual assets. The South Korean Financial Services Commission (FSC) announced on November 23 that NFTs will be taxed from 2022.
Based on a publication by The Korea Herald, the new tax law amendment would impose a 20% tax on an income that is acquired from virtual assets that surpasses 2.5 million won ($2,102) as of January 1, 2022. Doh Kyu-sang, the FSC vice chairman, said that just some NFTs would be categorized as virtual assets and thus subject to “other income” taxes, referring to those that are used for investment or payments on a huge scale.
The tax authorities are in charge of determining the whole scope of taxable nonfungible tokens. But, this announcement differs from October’s stand when the FSC had issued a public statement which is reaffirming that NFTs are not virtual assets and would not, in any way whatsoever, be regulated.
Korean legislators now seem to view NFTs in the same taxable light as cryptos. A planned tax on crypto gains was set to go into effect on January 1, 2022, but may now get delayed as a result of political pushback.
In recent years, South Korea has taken many measures that are designed to regulate the cryptocurrency market. The regulations have come to combat money laundering and other criminal activities coming with the nascent crypto market.
Based on The Korea Herald, all the 25 exchanges that were reviewed based on the August 2021 guidelines were discovered to have “inadequate levels of preparedness”. None of these exchanges met all the registration requirements and stipulations.
As the nonfungible token marketplace quickly expands in South Korea and the entire world, the discussion of over-regulation versus innovation is still dominated by controversy.
