Gov't to Whack 10% Tax on Bitcoin Earnings

The government wants to categorize earnings from cryptocurrency speculation as income and plans to levy around 10 percent tax on them.

A high-ranking government official said Thursday, "We have already decided to tax profits from investments in cryptocurrency. The question is only how much time we should give investors and when to start implementing it."

The tax could be included in a revised tax bill this year with a one to two-year grace period.

The government has been thinking about taxing profits from speculation when the Bitcoin craze reached alarming levels early this year. It concluded that cryptocurrencies are not financial or investment products, so instead it tentatively decided to classify them as "other income."

A government official said, "Gains on investments in cryptocurrencies will be taxed at a fixed rate regardless of the amount," which is expected to be in the 10-percent range.

But the Justice Ministry has yet to reach a decision on how exactly to classify cryptocurrencies, and it will take a while for the National Tax Service to figure out how to assess cryptocurrency trading.

"We're not sure whether we can include the new plan in this year's revised tax bill," the official said.