![[MARKET EYE] NFTs, DeFi investors in Korea may face taxation](https://crypto.newswireservice.net/wp-content/uploads/2021/11/20211101000723_0.jpg)
It’s not just cryptocurrencies — South Korea has been witnessing rapid growth of other forms of digital assets such as nonfungible tokens and decentralized finance.
Korean movie star Ha Jung-woo is one of the latest artists riding on the growing interest in the market as he sold his first digital artwork for 55.46 million won ($47,060) in August. Hybe, the management company behind K-pop sensation BTS, and Dunamu, the blockchain company that operates Upbit, the largest cryptocurrency exchange here, are also reportedly planning to issue BTS goods in the form of nonfungible tokens as well.
Along with the quickly emerging market here, the administrative move to tax profits from digital assets has also been gaining speed. But experts say the government still needs time and effort to make the taxation plan on digital assets ”fair“ and ”transparent.“
Concerns over the government’s rather ”hasty“ move came after a comment from the Finance Ministry last week that it is mulling the possibility of imposing taxing DeFi products. Under the plan, the government will apply a withholding tax rate of 25 percent and basic tax rate of 6 to 45 percent for income above 20 million won, according to officials.
NFTs, which are digital counterparts of real-world assets such as art pieces and music, are also to be subject to taxation. The country is already poised to levy income profit taxes on cryptocurrencies from Jan. 1, 2022.
“We are weighing whether NFTs fall into the virtual-asset category because there is a demand to include (NFTs among virtual assets),“ said Finance Minister Hong Nam-ki.
The government’s move to tax NFTs and DeFi products is supported by the updated guidelines on virtual-asset service providers by the Financial Action Task Force, an intergovernmental anti-money laundering watchdog. The FATF’s guidelines serve as the industry standard for anti-money laundering and counterterrorism financing obligations as a binding measure on member…
