Korean lawmakers plan to impose taxes on NFTs after classifying them as virtual assets.
Nonfungible tokens, or NFTs, will be taxed beginning next year, according to the Financial Services Commission of South Korea. According to The Korea Herald, as of January 1, 2022, income from virtual assets that exceed 2.5 million won ($2,102) will be subject to a 20% tax.
Only some NFTs, according to FSC vice chairman Doh Kyu-sang, will be classified as virtual assets and thus subject to “other income” taxes, referring to those used for large-scale investment or payment. The task of defining the full scope of taxable NFTs falls to the tax authorities.
However, this announcement differs from the FSC’s position last month, when it issued a public statement reaffirming that NFTs are not virtual assets and will not be regulated. Korean lawmakers now appear to consider NFTs to be taxable in the same way that cryptocurrencies are. A planned tax on cryptocurrency gains was set to go into effect on January 1, 2022, but due to political opposition, it may now be postponed.
South Korea has recently taken a number of steps to regulate the cryptocurrency market in an effort to combat money laundering. According to The Korea Herald, all 25 exchanges examined under the August guidelines had “inadequate levels of preparedness,” with none meet all of the requirements.