ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

Study on Taxability of Virtual Money (Ex：bit－coin)

  • Sang Yi Shin School of Business Administration, Chungbuk National University

Asian Tax Journal Vol. 19 No. 5 (2018), pp. 183-209

Abstract

Since the price of virtual money has risen more than ten times in recent years, virtual currency transactions are attracting tremendous attention. This study aims to examine the possibility of taxation of virtual money in Korea. Specifically, this study examined the trends and prior studies of the global perspective related to the taxation of virtual money in addition to the definitions and characteristics of virtual money, and examined the taxation range of virtual currency in Korea. Virtual currency trading in Korea is very demanding to make investments for the purpose of short－term high profit margins, which is very likely to have negative social effects. Therefore, in order to reduce this speculative demand, it is necessary to preemptively levy a high tax rate on trading gains and reduce the potential speculative demand. Therefore, the Korean government is reviewing the taxation of virtual money from September 2017, which covers transaction tax, capital gains tax, value added tax, inheritance, and gift tax. In a country that recognizes virtual money as an asset, it is stipulated that taxation should be levied on the gains on sales related to virtual money. In developed countries such as the United States, the United Kingdom, and Germany, policies are being made on virtual money, taxation on transfer income tax, transaction tax, inheritance, and gift tax. However, in the case of value added tax, there is no consistent conclusion regarding currency by country. Current many governments generally do not recognize virtual currency as real currency, and it is a general trend that they need to be taxed on the value they receive as assets, rather than as currency. In order to actually tax the virtual money, the government must first classify the legal status and definition of the virtual currency by clarifying the nature of the virtual currency, and the tax office plans the taxation according to the nature of the virtual currency. Further, since virtual money is being traded through distribution networks around the world, the taxation system should also keep pace with the system of each country.

Keywords

  • virtual money
  • bit－coin
  • taxability

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Asian Tax Journal

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