[권인욱] An incumbent tax attorney looked into the amendment to the Enforcement Decree of the Tax Law…

[출처: 셔터스톡]

[권인욱의 세잘알] On January 6, the Ministry of Strategy and Finance announced an amendment to the tax law enforcement decree. Through this, the market price for the taxation of virtual assets and the obligation to submit transaction data were specified. From January 2022, there is no change in the large framework for taxation by voluntarily returning comprehensive income tax as 22% (including local income tax) of the amount of gains over 2.5 million won for virtual assets transferred or lent by individuals. Let’s look at the details of the revised enforcement decree, along with my personal interpretation.

#①Specify the agenda acquisition price of virtual assets purchased before January 2022(Amendment) The acquisition price of virtual assets purchased before the taxable date can be calculated as the larger of the’market price at 24 o’clock on December 31, 2021′ and the’actual acquisition price’. At this time, the market price was revised to be the average of the amount disclosed by the companies notified by the Commissioner of the National Tax Service among virtual asset business operators reported under the Special Money Act.

(I) Virtual asset investment income is calculated as’transfer price-acquisition price-necessary expenses’. The higher the acquisition price, the lower the tax. However, if the actual acquisition price is significantly low after purchasing before January 2022, an act of immediately acquiring (buying) after transferring (selling) on ​​December 31, 2021, just before the taxable period, occurs to artificially increase the acquisition price. Confusion can come. Therefore, the acquisition price of the’agenda’ was introduced to prevent unnecessary activities. Also, regarding the concept of the market price at 24 o’clock on December 31, 2021, only the transaction price of the virtual asset business operator reported and accepted under the Special Provisions Act was recognized as the market price. It may sound like unspoken pressure to file a report under the Special Money Act to do a virtual asset business.

#② When to submit a transaction statement that a virtual asset business operator must submit to the tax office(Amendment) Virtual asset providers (exchanges, etc.) submit virtual asset transaction specifications for each trader (customer), but the submission cycle is specified by quarter and year. (I) Even if individuals do not self-report, they were asked to submit a transaction statement to the virtual asset business so that the virtual asset investment income can be taxed. In addition, I think that the intention to submit quarterly is to monitor tax evasion such as business activities using virtual assets and illegal donations. The details of the transaction statement are not specifically stated. If detailed information is requested, the tax administration burden of virtual asset business operators may be increased, but it is effective in detecting tax evasion. For example, if information must be submitted for each transaction, tax evasion such as direct gift between parents and children can be detected. If the transaction statement is simply summed over a certain period (monthly and quarterly), the effect of monitoring tax evasion is relatively low.

#③ Clarification of withholding tax when withdrawing virtual assets from non-residents and foreign corporations

(Amendment) When a non-resident/foreign corporation withdraws a virtual asset, the virtual asset business withholds’the lesser of 20% of income and 10% of the amount paid’ and pays the amount according to the formula set monthly to the tax office. In addition, whether a virtual asset trader is subject to withholding tax has been revised so that information can be requested or confirmed from the trader or the tax authority. (I) When a resident withdraws virtual assets, there is no withholding (taxable) amount, but non-residents, etc., are withheld even if they withdraw. Therefore, it is important to have residents, and even foreigners are not always non-residents. According to the tax law, the concept of a resident is a person who has satisfied the requirements, such as living in Korea for 183 days or longer, and if it is not a resident, it is a non-resident. For example, if an investor’s nationality is the United States, but a tax resident in Korea whose property, family, or job is in Korea withdraws virtual assets from the Korea Virtual Asset Exchange, it is highly likely to withhold tax. This is because Americans of nationality are more likely to be non-residents. However, if an investor claims that he/she is a resident, it seems that the virtual asset exchange has been revised to make a request to the investor or the tax authority so that the virtual asset exchange can confirm the fact, thereby preventing the case where it is unfairly regarded as a non-resident.

#④ Evaluation of virtual assets held by corporations

(Amendment) A corporation’s virtual assets have been added to assets that can be revalued at market prices, and the valuation method has been revised so that only the’first-in-first-out’ method is recognized. (I) As virtual assets were not subject to evaluation under the existing corporate tax law, they were not recognized by the tax law even if they were evaluated financially. However, the concept of the market price of virtual assets has been revised, and the Ministry of Information believes that it is tax law reasonable to evaluate virtual assets with frequent market price fluctuations. In addition, there are various methods of valuation of assets, and corporate tax changes according to the method, so there is a lot of quarrels between the customs office and the taxpayer, so the valuation method was clarified as first-in-first-out.

#⑤ Establishment of a method for evaluating the market price

(Amendment) A new method of evaluating the market price of virtual assets in the case of donation and inheritance was newly established. If the virtual asset is a virtual asset business operator and is traded at the business site of the business notified by the Commissioner of the National Tax Service, the average daily average price for one month before and after the evaluation base date is used as the evaluation price. In the case of other virtual assets, it has been revised to be evaluated at the market price at the end of the evaluation base date of the’businesses equivalent to virtual asset business operators’. (I) In the case of assets with frequent fluctuations in market price, it is stipulated in the tax law to evaluate the average value of two months before and after the valuation date as the market price for listed securities. As such, it is judged that the average value of virtual assets is calculated over a period of one month, considering that not only the market fluctuations are severe, but there are no daily price fluctuation restrictions like listed stocks, and they are often born and destroyed. In addition, domestic stocks are traded only on the Korea Exchange (KRX), but virtual assets do not have a single central exchange, so not only the market price of each exchange is different, but also the presence or absence (listing) of transactions. A business that is equivalent to a virtual asset business operator is seen as a private institution that publishes the market price of virtual assets such as CoinMarket Cap, and the standards are ambiguous and confusion for taxpayers is expected. For reference, even now, there is a legal basis for taxation even if inheritance and gift as a virtual asset are given. In the case of market price, there is no clear standard, but there are cases where tax is reported using market prices such as coin market cap.

#Finish

Most of the contents of the announced amendments appear reasonable as the details of the taxation plan after January 2022. Since there is a period of one year until the actual taxation, the amendment may appear more, but I would like to present a guideline in the form of Q&A for questions that investors and business operators frequently curious about. This is because the ambiguity must be resolved to prevent confusion and unnecessary disputes in the tax administration. In-Wook Kwon, Representative Tax Accountant, IW Tax Office