Companies involved in block reward mining may enjoy a significant tax break when South Korea’s new digital currency tax regime begins in 2022.
Korean news outlet Pulse News reported that the country’s Ministry of Economy and Finance announced additional details of South Korea’s soon-to-launch digital currency tax law. Included in the new regulations is a provision for block reward miners to report any operating expenses as tax deductibles.
These deductible expenses include electricity bills, in which miners will need to prove how much electricity they used in their blockchain mining operations when reporting income in May.
The government hopes to keep the amount of tax that companies pay new year to a minimal amount. They will apply the taxation to gains or losses to be incurred from next year.
Apart from the business expense deductions for block reward miners, tax officials also clarified the incoming tax regime. South Korea’s 20% tax imposed on digital currency trading will only apply to gains above 2.5 million won (about $2,230) earned in 2022.
Despite some opposition to the digital currency tax law and token trading, the country’s finance minister has previously stated that the move was inevitable. South Korea’s Prime Minister-nominee Kim Boo-Kyum already promised to examine the digital currency tax law amid unrelenting criticism from digital currency stakeholders in the country. Recently, Kim said there is a need “to thoroughly prepare how the government will handle the issue.”
South Korea’s ruling Democratic Party is also reportedly seeking to bring the digital currency trading market under state control, with one representative going as far as to suggest measures to manage the current 24-hour trading and to safeguard young investors. The country’s main opposition People Power Party plans to set up a task force to look into systemizing the market.
Although South Korea is not a large block reward mining hub, there have been local reports of an uptick in mining activities in the country. PC bangs have also been using their idle computers to mine alt-coin digital currencies amid declining patronage caused by COVID-19 lockdown restrictions. In March, a local news outlet reported an increase in mining hardware imports at Incheon International Airport.