Metaverse: Non-fungible tokens, or NFTs, will be taxed beginning next year, according to the Financial Services Commission of South Korea. Reportedly, a 20% tax on revenue from virtual assets over 2.5 million won ($2,102) will deploy.
Only certain NFTs would be classified as virtual assets. Therefore, they would be liable to the “other income” tax, according to FSC Vice President Doh Kyu-sang. He was referring to those utilized for large-scale investments or payments. It is up to the tax authorities to define the full scope of taxable NFTs.
However, this announcement departs from the FSC’s position last month. Indeed, it released a public statement reiterating that NFTs are not virtual assets. And therefore, will not be regulated. Korean lawmakers now appear to be considering NFTs in the same light as crypto-currencies in terms of taxation. A proposed tax on crypto-currency gains was set to take effect on January 1, 2022, but due to political resistance, it may be postponed.
In a concerted attempt to combat money laundering, South Korea has lately taken a number of moves to regulate the crypto-currency sector. The 25 exchanges examined under the August guidelines had “inadequate levels of preparation,”. “With none meeting all registration requirements,” according to the Korea Herald.
Indeed, South Korean officials have sown confusion this year by making contradictory statements about whether the forthcoming crypto-currency tax. Which is due to take effect in 2022, will be repealed or modified.
The National Assembly, South Korea’s legislative body, has been debating whether or not to amend the crypto-currency tax throughout 2021. In the event of no tax adjustments, revenue produced from crypto transactions above 2.5 million Korean won ($2,100) will be subject to a 20% tax. Indeed, the NFT law is the latest illustration of the country’s bafflement over crypto assets.
Yesterday, FSC Vice President Do Gyu-sang said: “In line with the Special Reporting Act, the Ministry of Strategy and Finance is preparing tax rules for NFTs,”. The Special Reports Act establishes crypto-currency rules, including taxation.
While the NFT and metaverse sectors in South Korea and throughout the world are booming, the argument over regulation against innovation is still raging.