South Korea has one of the highest tax rates in cryptocurrency, requiring investors to pay 20% of their profits if it crosses an equivalent of $2100. While high taxes seemed to have worked fine for the country, its recent taxation chaos is turning out to be ugly. People are taking to social media to protest against the government’s arbitrary decisions. With news of new taxation on NFTs being confirmed, citizens and crypto investors in the country are now worried about the future of NFT and crypto in South Korea.
The government of South Korea had previously stated that it has no plans to impose taxes on NFTs. NFT taxation has always been a slippery slope since NFTs are more of artwork than investment instruments. Being a nascent sector, the legal status of NFTs is undecided in most countries of the world. However, the majority do not see NFTs as any threat, while crypto comes with its fair share of dangers and volatility.
South Korean financial regulators have decided to classify NFTs as virtual assets and, therefore, they will be taxed under the same laws. The situation has become all the more chaotic due to political setbacks and opposition protests in South Korea. If NFTs are taxed, there will be many loopholes in the system that do not have any ready solution. The Financial Services Commission head Doh Kyu-sang acknowledged the same and said that not all NFTs would come under taxation. The announcement is causing confusion among citizens since the Financial Services Commisipon said that NFTs are not virtual assets less than a month back.