Korea’s financial authorities are now suggesting that NFTs could be taxable.
Korean business daily MoneyToday reported on Tuesday that Financial Services Commission (FSC) vice chairman Doh Kyu-sang told lawmakers last week that his commission defines NFTs as “digital assets” under the Act on Reporting and Use of Specific Financial Transactions, at least in principle, and believes them to be subject to the crypto tax that will go into effect from next year.
This is the first time the financial authorities have officially declared their position on the definition of NFTs. Private entities have been talking about this, though.
To be more specific, Doh said the committee would determine whether an NFT amounted to a digital asset based on the nature of the token. NFTs that verify the authenticity of a painting, for example, would not be classified as a digital asset subject to taxation. NFTs that are clearly investment items will be.
Doh’s comments — as reported by MoneyToday — have people scratching their heads since earlier this month, TokenPost quoted an unnamed FSC official who said NFTs would not be defined as a digital asset, citing the FATF’s latest guidelines on the matter.
He did say, however, the NFTs that could be used as means of payment or investment might be declared digital assets.
The FAFT has opined that NFTs are not virtual assets as long as they are used as “collectibles rather than as payment or investment.”
Before we forget, Doh did remind lawmakers that the parliament will need to make a decision on whether the crypto tax will begin next year or not.