In Brief:
- South Korea’s financial regulator considers imposing a tax system on NFTs.
- The regulator plans to collect taxes under the Specified Financial Transaction Information Act.
- The financial ministry opposes the FSC’s idea of taxing NFTs.
The South Korean financial regulator Financial Services Commission (FSC), stated its intention to implement a tax system for NFTs, according to a report from the Korea Herald.
The FSC’s vice chairman, Doh Kyu-sang, stated at the national assembly that the South Korean government believes NFTs can be taxed using the Specified Financial Transaction Information Act.
According to the Specified Financial Transaction Information rule, any income earned from buying and selling virtual assets is classified as other income, which is subject to taxation under established rules.
The Finance Ministry, on the other hand, took issue with the FSC’s assessment of NFTs and believes that classifying them as virtual assets is still debatable.
Park Sung-Joon, head of the Blockchain Research Center at Dongguk University, stated, “In the situation where the financial authorities are contradicting each other, it is confusing for market players of virtual assets to know whether they must pay taxes or not.”
Park added that if both regulatory agencies agree to levy taxes on NFTs, the tax rates should be the same as those imposed on real assets.
Last month South Korea’s finance ministry announced its plans to tax 20% on crypto gains from 2022 onwards. Finance Minister Hong Nam-ki stated then that NFTs are excluded from the tax plans. “(I think) NFTs do not belong to virtual assets yet,” Hong added.
The regulatory body’s and finance ministry’s differing views on NFTs could lead to a lot of market confusion, which is bad for the ecosystem.
