Starting next year in South Korea, Bitcoin, the world's biggest cryptocurrency by market capitalization, will no longer be a tax-free hobby or investment.
According to the Ministry of Economy and Finance on Monday, income gained from trading Bitcoin or other cryptocurrencies will be subject to taxation from January 1st, 2022.
Traders and investors will have to pay 20 percent tax when their annual income from cryptocurrencies exceeds 2.5 million won or some 2,2-hundred-60 U.S. dollars.
Let's say a person made 10 million won by trading or holding Bitcoin.
Since up to 2.5 million won is exempt, 20 percent of the rest,which is 7.5 million won is subject to taxation.
So, that person would have to pay 1.5 million won in tax.
In real terms, the tax will be levied on the net income that excludes the acquisition value and the commission fee paid to the cryptocurrency exchange.
For virtual assets held prior to 2022, the higher value between the original acquisition price or the market value at the end of this year will be considered the exempted acquisition value.
This move comes after the government recognized Bitcoin as a financial asset, categorized under "other income".
Profits will have to be reported on income statements, with taxes to be paid every May.
Those who fail to report their profits could be fined.
With interest in Bitcoin exploding again in South Korea with the rapid rise in the Bitcoin price, the new tax has angered local cryptocurrency investors.
A petition against the new tax posted on the presidential office's website on February 10th has already garnered over 38-thousand signatures and the figure is rising.
The Blue House will be required to respond should the petition hit 200-thousand signatures by the end of March.
Kim Sung-min, Arirang News.