South Korean MPs have again spoken out about the need to tax the non-fungible token (NFT) sector, while the government is facing challenges from all sides from MPs opposed to its controversial tax plans.
As reported earlier this week, Finance Minister and Deputy Prime Minister Hong Nam-ki insisted that the much-maligned 20% levy on crypto trading profits above the annual threshold of $2,100 will be introduced in January next year when questioned on the issue by the National Assembly’s Planning and Finance Committee.
Hong noted that Seoul is also “considering” proposals to tax NFT sales.
But on Friday, it was the committee’s turn, News1 reported, with opposition People’s Power deputy Yoo Kyung-jun expressing “concern” about the NFT industry, saying that current rules make it “unclear whether NFTs are included in tax calculations for cryptocurrencies,” a fact “that could lead to tax evasion,” he said.
And Kim Dae-ji, the head of the National Tax Service (NTS), was also questioned by the committee’s deputies about crypto tax.
Kim was confronted with questions about how the NTS would handle sensitive crypto issues. One deputy gave the theoretical example of a case in which a South Korean crypto trader bought cryptoassets worth “about $8,000” on a U.S. Exchange, then took the tokens to a domestic exchange and saw the price rise to double that amount within a year – eventually selling them for fiat the following year for three times the original amount.
A congressman from the ruling Democratic Party asked how the NTS would enforce its tax policy in cases like these. Kim replied:
“There are practical difficulties in [calculating] purchase prices. But we will manage to [find a way to do this] without any setbacks by hiring new staff, creating a digitized system, and collecting transaction data.”
One deputy also claimed that the NTS is not adequately prepared for the task of taxing cryptocurrencies – pointing out that the tax service can’t even decide what to call tokens, and noting that “the NTS uses the terms’virtual assets’ and ‘cryptocurrency’ interchangeably.”
“The tax law requires taxpayers to report their transactions with cryptocurrencies during the fiscal year starting next May, but I am aware that there are practical difficulties in doing so,” Kim concluded.