[정재욱의 이슈Law] Bitcoin taxation is less realistic

[정재욱 법무법인 주원 파트너변호사] Bitcoin is constantly reviving despite the Minister of Justice’s remarks on the closing of the virtual asset exchange and the warnings and threats of numerous institutions. However, in the end, the tax was also inevitable for Bitcoin. In accordance with Article 38 of the Constitution, all citizens are obligated to pay taxes as prescribed by law.

There have been numerous controversies regarding the taxation of bitcoin transactions, but there has been no tax base law that can be applied directly to the market margin. If there is no law under our constitution, there is no obligation to pay tax, and specific tax categories and tax rates must also be determined by law. This is the reason why, despite various controversies, the price difference in bitcoin transactions was not properly taxed.

Corporate tax imposed on the basis of net asset growth or gift tax based on comprehensive attention could be levied, but there has been controversy over whether capital gains tax or other income tax can be imposed on market gains arising from individual transactions Wasn’t. This is because there was no proper provision in the income tax law.

However, as the income tax law was revised on December 29 of last year, the blade of taxation could not be avoided. According to the revised law, income generated to domestic residents from the transfer or rental of virtual assets such as bitcoin is classified as other income. 20% of the amount deducting 2.5 million won from this other income amount becomes the tax amount. For example, if you earned 5 million won from a bitcoin transaction, the tax amount would be 500,000 won.[(500-250) X 0.2 = 50] These tax amounts must be reported together when filing a comprehensive income tax return in May.

This amendment is expected to take effect on January 1 of next year. Therefore, for virtual asset transactions that take place next year, the income amount must be meticulously calculated and the related tax amount paid. If you are caught without properly reporting virtual assets and other income, you may be subject to an additional tax of up to 60%.

In the case of selling virtual assets held before the enforcement of the Act, there may be questions about how the tax amount is calculated, and this is detailed in the amendment to the Income Tax Act. The acquisition price is recognized as the larger of the actual acquisition price before the enforcement of the Act or the average of the prices announced by the virtual asset operators announced by the Director of the National Tax Service at 0 o’clock on January 1, 2022. For example, if you bought one bitcoin for 50 million won today and the price of bitcoin on January 1, 2022 reached 100 million won, the acquisition price is recognized as 100 million won. If bitcoin was sold for 150 million won in February 2022, the tax base amount would be ‘150 million-1 billion won’, which would be 50 million won. Since 20% of the amount minus 2.5 million won from 50 million won becomes tax, the final tax is 9.5 million won, 20% of 47.5 million won.

A legal provision for securing taxation data has also been introduced, and virtual asset business operators must submit a statement of virtual asset transaction for each trader to the competent tax office. It is also a huge burden for the virtual asset exchange. The problem is that it is possible to trade virtual assets without going through a domestic virtual asset exchange. In the case of transactions on foreign exchanges or between individuals, in reality, it is difficult for the tax authorities to capture them. Although it is possible to induce voluntary tax payment through strong penalties for tax evasion such as the imposition of penalties, the reality is inevitably lowered considering the actual conditions of virtual asset transactions. It is also possible to predict the departure of funds overseas.

In addition, in the case of virtual assets, transactions can be made dozens or hundreds of times a day for dozens or hundreds of stocks, and it is difficult to properly calculate the amount of other income from the standpoint of individuals who have to pay taxes. If you are using multiple exchanges at the same time or even using an interpersonal trading platform, it is expected that you will experience considerable difficulties from tax calculation. It may be possible to get help from legal and tax experts, but I think it is not desirable to introduce transaction tax from the beginning.

Virtual asset transactions are gradually being incorporated into the institutional rights due to the introduction of the additional asset business reporting system through the revision of the Special Money Act and the introduction of other income tax on virtual asset transactions through the revision of the Income Tax Act. Although it is welcome to regulate virtual asset transactions that have been neglected, it is quite unfortunate that the direction is focused on securing tax revenues rather than protecting investors or preventing speculative transactions. You will need this.