South Korea’s Financial Services Commission announced that nonfungible tokens will be taxed starting next year. This tax law amendment would impose a 20% tax on income from virtual assets that exceed 2.5 million won as of January 2022.
The FSC’s vice chairman stated that only some NFTs would be considered as virtual assets and therefore subject to other income taxes, referring to those used for investment or payment on a large scale. Tax authorities are in charge of defining the full scope of taxable NFTs.
This announcement diverges from last month’s position when the FSC had issued a public statement reaffirming that NFTs are not virtual assets and would not be regulated. Korean lawmakers now appear to view NFTs in the same taxable light as cryptocurrencies. A planned tax on cryptocurrency gains was set to take effect in 2022, but may now be postponed due to political pushback.
The country has recently made measures to regulate the crypto market, in a targeted effort against money laundering. As the NFT marketplace rapidly expands in South Korea and the world, the debate over regulation versus innovation remains controversial.
