South Korea Hints at NFT Tax

South Korea’s financial regulator signaled possible taxation of non-fungible token (NFT) transactions, sending a mixed signal to the market, The Korea Herald reports.

According to FSC Deputy Chairman Do Kyu-san, the government could levy taxes in accordance with existing law. It classifies income from virtual asset trading as “other”.

In early November, citing norms FATF stated, that NFTs generally do not fall under the definition of virtual assets.

According to the publication, the Ministry of Finance shares the same view.

Experts fear that a shift in the FSC’s position could sow market confusion over taxation.

«In a situation where financial authorities contradict each other, participants in the virtual assets market will not be able to determine whether they should pay the tax», said Pak Sun-jung, head of the Blockchain Research Center at Dongguk University.

Since 1 January 2022, the country introduced a capital gains tax on profits from virtual assets. The rate will be 20% on income above 2.5 million won (~$2,105).

In the expert’s view, if authorities have decided to impose a similar tax on NFTs, they should apply to it the norms for real art assets. People selling physical artworks pay 22% on income above 60 million won (~$50,520), he noted.

Recall, the government stood firm on the timelines for cryptocurrency taxation. Lawmakers from both the ruling party and the opposition had sought to delay.

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