South Korea Plans Tax Perks for Blockchain Startups
The South Korean government has announced a plan to revise the current tax rules to widen benefits for companies that focus on the development of nascent technologies, including blockchain, as part of the country's push for innovation growth.
Announced Wednesday, after a meeting of ministers from eight government agencies working on economic policy, tax rates are to be reduced for companies dealing with a range of 157 "new-growth technologies" in 11 areas, according to a report from CoinDesk Korea.
In addition, the ministers proposed to reduce the threshold for companies to be eligible for tax reduction benefits. Currently, in order to get tax deduction, a firm must allocate more than 5 percent of the previous year's gross sales to R&D and 10 percent of its R&D investment should focus on new growth technologies such as blockchain.
Since a lack or absence of sales in a startup's first year could make it difficult for it to apply for tax benefits, the ministers suggest the r&D investment requirement should be changed to more than 5 percent of the current year's gross sales.
However, the government has not disclosed how much the tax deduction might be, saying further details of the proposal will be announced on July 26, with the changes expected to take effect by the first quarter of 2019.
The meeting is the second in a week on the same topic, which was also discussed by ministers last Friday. An report from news agency Yonhap at the time indicated that the new tax rule would apply to any company based in South Korea that focuses on blockchain technology, whether they are foreign or domestic firms.
In related news, the South Korea's Ministry of Science and ICT recently announced it plans to invest $9 million until the end of 2019 to support blockchain pilot programs in six public service areas.
The chairman of Korea's National Policy Committee has called for the legalization of initial coin offerings (ICOs), provided that a regulatory framework is put in place.
According to a report from CoinDesk Korea on Tuesday, Min Byung-Doo, who is a member of the country's governing Democratic party, said that, with token sales becoming a global trend, "I do not want the ICO door closed completely ... The state should not ignore [the issue]."
The policy chief spoke earlier Tuesday during 8th plenary session of the National Assembly, at which lawmakers posed questions to the administration.
In order to create trust in the industry, ICOs should also be regulated, Min stressed. However, the official pointed to reluctance on the part of the government to draw up new rules as a prevailing issue.
Specifically, he said that "fraud, speculation and capital laundering must be strictly prohibited," and the crypto industry would need to self-regulate and introduce safety standards as well.
The country's financial watchdog, the Financial Services Commission, announced a ban on ICOs in September 2017, although the law has not yet been enacted, according to the report.
The lawmaker pointed to the economic advantages of token sales, saying that while there is a pessimistic view of cryptocurrencies in some quarters, many token projects are seen as having a viable future.
Raising the vast sums of money that have been raised in some token sales, Min said:
"We can see that the flow of investment is clearly changing compared to ICO and angel fundraising. The ICO has raised $1.7 billion for Telegram and $4 billion for Block.One, It is getting bigger and bigger."
Efforts thus far
Several bills seeking to provide a legal framework for cryptocurrencies have already been proposed to the National Assembly in South Korea, with such legislation coming under the jurisdiction of the Political Affairs Committee, CoinDesk Korea previously reported.
With Min being chairman of the committee and now strongly expressing his belief that ICOs should be allowed in law, the odds of regulations being passed in the near future may have just increased. However, any legal measures must pass a vote of the Politburo Committee at a future plenary session.
Further, while Prime Minister Lee Nak-yeon is a supporter of blockchain technology, he has said that the government banned ICOs over concerns about "side-effects and market overheating."
In separate statements today, Min told a panel discussion with the Korean government's science chief, "Let the government, the National Assembly and the blockchain association quickly create a working group to block fraud, speculation, money laundering and develop the block-chain industry."
source:
https://www.coindesk.com/south-koreas-policy-chief-calls-for-legalizati…