South Korea to exclude cryptocurrency exchanges. The South Korean government has announced a new set of tax laws amendments and policies. One of the proposals states that bitcoin exchanges will not be eligible for income and corporate tax deductions currently enjoyed by small and medium-sized businesses and also they will exclude all cryptocurrency exchanges from the legislation of venture businesses.
The Ministry of Small and medium-sized enterprises (SMEs) and Startups (MSS) said that it would consider crypto exchanges alongside bars and nightclubs as businesses that it would “not encourage as a venture enterprise.”
The press release explains: “The Small and Medium Venture Business Department [of the MSS] has no intention to regulate cryptocurrency trading and disclosures (ICOs), but as problems such as speculation emerge, cryptocurrency exchanges are not a target for the government to encourage as a venture enterprise,”
The MSS also added that “we will also foster blockchain technology and related companies at the government level.”
South Korea to exclude cryptocurrency exchanges. Millions of companies in South Korea enjoy this benefits of the act, but only aims in providing small and medium businesses with tax breaks, relaxed government policies, and privileged support for raising funds and acquiring lines of credits.
Changes in tax rates:
- Cryptocurrency exchanges will now face a 100 percent increase in income
- Corporate tax–up from 12.5 percent to 25 percent–and cannot benefit from more than a 75 percent cut in acquisition tax.
- Credit guarantees offered by national banks will now disappear.
All these changes brought into effect immediately upon announcement on Oct. 1. But the existing exchanges holding the certificate–such as Bithumb, UPBit, and Coinone–cannot reapply for the certification after expiry. Since most of the licenses are valid until the end of 2018.
“The measure implies that the government is regarding not only cryptocurrency exchanges but also every blockchain-related venture firm and business as gambling.” stated by an unknown industry in regard to the new developments to tax laws. It also added that in spite of South Korea’s interest to lead the blockchain technology industry is affected by the move. This affects the local cryptocurrency users and they might relocate to crypto-friendly nations like Singapore and Malta.
For instance, last decade South Korea excluded gaming companies from certifications. This move resulted that people below 16 are forbidden in accessing online games for 6 hours each day. This move created a lot of opportunities to Chinese gaming companies which attracted both users and developers talent. Keeping this in mind, the Blockchain industry might follow a similar plot in South Korea.