South Korea will not tax NFT gains even as it moves to tax crypto income
South Korea is undecided on how it should tax gains made from NFTs
It is no longer news that South Korea is looking to start taxing crypto gains from 2022, however, the Asian country’s minister of Economy and Finance Hong Nam-ki has revealed that the proposed crypto tax law will not be applicable to non-fungible tokens (NFTs). The minister made this revelation while speaking at the National Assembly’s annual review on Wednesday.
South Korea undecided on NFT tax
During the review, the finance minister confirmed that the government was going to impose a tax levy on all gains made through crypto-related transactions in the country. When he was asked if this tax regime was going to cover NFTs too, Hong Nam-ki noted that discussions were still ongoing on if NFTs should be classified as virtual assets. The minister continued that NFTs are not covered under the newly proposed income tax law.
The lawmaker who asked the question, Yoo Gyeong-joon, a committee member of the National Assembly on Strategy and Finance, hinted at the reason why he asked the question. According to him, NFTs have become quite common in the creative sector and have seen its application in different niches like artworks, online games, real estate etc.
NFT taxes around the world
While South Korea is undecided on how to tax NFTs. Two countries have already made a headway on how they would choose to tax this class of digital assets. These countries are the United States of America and Australia.
According to a Forbes report, “for those with U.S. tax obligations (NFTs) can also be a goldmine for the IRS. Why? Because unlike most other forms of income and assets, NFTs can create multiple taxation events for both those who are creating them and those who are trading them.”
The report continued that the US Internal Revenue Service thinks of NFTs as collectibles and thus subject gains on it to a 28% tax.
In Australia, it is a little bit more straightforward as available information on the government website shows that NFT gains are subject to capital gains tax.