The South Korean government decided to exempt the country’s crypto and blockchain companies from the intended tax benefits for growth technologies. As expected, this decision was met with considerable resistance from the local crypto community.
In July, the South Korean government adopted a law that supports small and medium-sized enterprises, especially those dealing with so-called growth technologies; to promote innovation and technological innovation in the country.
However, the new rule does not apply to all new companies and start-ups. The Ministry for SMEs and Start-ups has compiled a list that defines areas that are exempted from the tax benefits. Besides the gaming industry and the entertainment industry the authority also included blockchain companies. The ministry added both crypto exchanges, and blockchain start-ups.
Reasonably, the classification was not received well in the South Korean crypto industry. A first argument coming from blockchain representatives was that this measure reflects the lack of tax advantages for crypto companies, and leads to economic disadvantage. Also, the classification by the Ministry baffled the representatives of the industry.
As Korea Times reported, the largest crypto and blockchain associations in South Korea are now against the regulation. The Korea Blockchain Association, the Korea Blockchain Industry Promotion Association, and the Korea Blockchain Startup Association issued a joint press release.
“Blockchain-based virtual currency trading will soon get treated just like gambling and alcohol businesses. Korea can be an ideal incubator to promote cryptocurrency and blockchain-related industries. High-speed internet infrastructure is already here, unparalleled to any other country in the world. And the Korean people are very adoptive of technology. Now it is the government’s role to establish a favorable environment for virtual coins and their blockchains. However, if the government imposes more regulations instead of helping them, firms will move their bases abroad to find a better business environment.”
The Blockchain Company’s exemption from tax benefits is an expression of contempt and “daunting for the entire blockchain industry.”
The fate of the proposal from the Ministry for SMEs and start-ups will be decided in a few weeks. The government is examining the draft until 4 September. The local