South Korea is proposing to introduce a cryptocurrency tax ('crypto tax') that will impose a 20% tax rate on cryptocurrency income that is 2.5 million won, about $2,000 US, or higher.
The proposed crypto tax bears some interesting contrasts with the Canadian tax authority's approach to the increasingly popular cryptocurrency:
- The proposed crypto tax applies a 20% flat rate, as opposed to CRA's position that cryptocurrency is categorized as a commodity, leading to the inevitable conclusion that the same progressive rates apply to cryptocurrency as other types of incomes.
- Different from South Korea's proposal, in Canada the no threshold rule applies to cryptocurrency income, as there is no carved-out crypto tax in Canada.
It seems that the Canadian treatment, which harmonizes the treatment of income from cryptocurrency and other types of income, is administratively more streamlined - satisfying the simplicity principle. That said, we will not know for sure until the amended tax code of South Korea receives Parliamentary approval by early September.