Death and Taxes… there are only two certain things in the universe, death and taxes. This has been said for decades, and the phrase will continue to make sense for centuries.
Years ago, many thought that investing in Bitcoin was the ideal way to escape taxes. Governments did not give much credit to Bitcoin, and the money that many had in that currency was in a very attractive fiscal limbo. Over time, laws have been imposed that require declaring what you have in bitcoins, and now the same is beginning to happen with NFTs.
At the moment it is only happening in South Korea, a country that is exploring ways to tax non-fungible tokens (NFT).
Let’s remember: NFTs are digital objects that many are collecting, such as gifs, games, works of art and music, among others. Whoever buys that digital object, can say that it is its owner, and the record of its ownership is kept in the blockchain.
South Korea aims to use one of its existing laws to tax the income earned from the purchase or sale of these virtual assets. If someone buys an NFT for 10,000 and sells it for 20,000, they will have to pay the corresponding taxes, as in any other transaction to buy and sell assets.
This is the Law on Specific Information on Financial Transactions, which defines cryptocurrency as a “virtual asset” and focuses on a reporting system for cryptocurrency exchanges. A month ago, Finance Minister Hong Nam-ki said during a parliamentary audit session that NFTs should not be classified as virtual assets, although now the exact opposite has been said.
Under South Korean law, virtual asset certificate holders must pay a 20 percent tax on income that exceeds $ 2,000, and many NFT artworks fall into that circle.
It is clear that they are being fast, since, in most countries, regulators have not yet put on the table what is happening among those who collect NFTs and make millions from it.