South Korea is one country that can generate a significant amount of volumes when it comes to investing and trading in cryptocurrencies. Recently, however, the South Korean government stated that the tax sops will end soon. The taxes are currently provided to the local cryptocurrency exchanges. The government further added that the tax sops have not resulted in any significant increase in revenue. This is one of the main reasons why the South Korean government is thinking about withdrawing them.
Currently, the South Korean exchanges enjoy a relief of up to 50% 200% on the taxes on their operations. That is why they are able to expand at a significant pace. Moreover, the cryptocurrency exchanges are often listed under the small and medium enterprises are under the start-up category. As a result, they are able to endure more benefits as well.
According to the South Korean government, for the first 5 years, the cryptocurrency exchanges will be able to enjoy the benefit of 50% to 100% in taxes. Thereafter, they will have to apply for tax cuts. These tax cuts will range from 5% to 30%. The government further added that no significant value was generated by providing these tax sops. This is the reason why they are being limited to the first 5 years.
However, the revised bill has not been passed by the National Assembly. It will be put forth before the National Assembly on August 31st. Only when it is passed in the National Assembly, it will take effect. Till that period of time, it is just a provisional.
The South Korean government however clearly indicated that the start-ups which are using the blockchain technology will be eligible for the tax cuts. As a result, the government is focusing on providing the start-ups with a much better ecosystem so that they are able to innovate and flourish as well.
It remains to be seen whether these changes in the tax cut will have any kind of impact on the growth of the cryptocurrency exchanges in South Korea. Currently, a significant portion of the population trades in the cryptocurrencies on a regular basis. This is because the cryptocurrency exchanges are able to significantly expand their operations due to these tax cuts as well. It remains to be seen whether the pace of growth remains the same for the South Korean cryptocurrency exchanges in the future or not. If the volumes decrease, then this might negatively impact the cryptocurrency prices all over the world.