[2020 Tax Law] 20% Tax Rate Imposed on Virtual Assets... Excise Tax on Liquid E-Cigarettes Adjusted from 370 to 740 Won

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[Asia Economy Reporter Kwangho Lee] Starting next year, a 20% capital gains tax will be imposed on virtual assets such as Bitcoin. Additionally, the individual consumption tax rate on liquid-type electronic cigarettes will be significantly increased.

On the 22nd, the Ministry of Economy and Finance held a Tax System Development Deliberation Committee meeting and reviewed and approved the "2020 Tax Law Amendment" including these contents.

According to the amendment, the Ministry of Economy and Finance will tax income from virtual assets generated after October 2021 to improve tax equity.

Under the current income tax system, it is classified as other income and a 20% tax rate is applied. However, if the income amount is 2.5 million KRW or less annually, it is exempt from taxation.

It is excluded from comprehensive taxation and separated, and taxpayers are required to report and pay virtual asset transaction income once a year.

The Ministry of Economy and Finance also adjusted the individual consumption tax rate on liquid-type electronic cigarettes from 370 KRW to 740 KRW per 1 milliliter (ml) of nicotine solution to improve tax equity among tobacco products.

Furthermore, tobacco manufactured using nicotine extracted from the 'root and stem' of tobacco leaves will be added to the scope of tobacco subject to individual consumption tax.

In addition, for those subject to comprehensive taxation on financial income, new subscriptions to all interest and dividend income tax-exempt products will be restricted; gift tax will be strengthened when a major shareholder waives their own dividends and gives excess dividends to related parties as a form of gift; and tax benefits will be excluded for large-scale partnership corporations with sales exceeding 100 billion KRW or assets exceeding 500 billion KRW. However, the tax support application period will be extended by two years for partnership corporations other than large-scale partnership corporations.

This content was produced with the assistance of AI translation services.