Blockchain
South Korea’s ruling party considers 3-year extension on cryptocurrency taxes
A South Korean news agency recently reported that the ruling government is considering a three-year delay in the implementation of the crypto tax. As a result, the taxation of capital gains in cryptocurrencies, initially scheduled for January 2025, would be postponed to January 2028.
Cryptocurrency Tax Break Possible for South Korean Investors
The taxation of cryptocurrencies has been the subject of heated debate in South Koreaoriginally started in 2021, after passing the related tax law in the National Assembly during the Moon Jae-in administration. Later, they further postponed the decision to 2023 considering the presidential election the following year, and further to January 2025 under the Yoon Seok-yeol administration.
Some have criticized the fact that public opinion among taxpayers largely influences cryptocurrency tax policy in South Korea. In May 2024, the Financial Services Commission (FSC) presented data showing that the total number of cryptocurrency investors in South Korea increased by 6.45 million.
With the fall Bitcoin Price and a sharp correction in the broader cryptocurrency market, there is growing dissatisfaction over cryptocurrency tax issues currently in South Korea. One of the market insiders told Hankyung publication:
“The daily cryptocurrency trading volume on domestic exchanges, which was in the region of 20 trillion won in March, has recently collapsed to the region of 2 trillion won. If the cryptocurrency income tax is imposed early next year, most investors will leave, further reducing trading.”
Read also: India to present Union Budget on July 23: Will crypto investors get tax breaks?
Income tax deferral gains momentum
Interestingly, the planned implementation of the investment income tax is also facing delays in South Korea. Despite the government’s announcement to abolish the tax, former Democratic Party of Korea leader Lee Jae-myung said on the 10th of this month that “we need to think more about the timing of implementation.”
Now, if the crypto tax goes ahead while there are delays in the financial investment tax, investors may feel disadvantaged. Critics argue that large-scale taxation of cryptocurrencies is impractical due to insufficient system and institutional preparation. One government official said, “Secondary legislation is needed to classify cryptocurrencies and specify in detail the types of activities within the sector so that taxes can be collected without difficulty. Institutional arrangements are not yet sufficient.”
However, some opposition leaders have countered that the government’s lack of preparation shows that they have not done what is necessary to implement crypto taxes. They also added that public opinion is becoming too important in implementing crypto tax regulations.
Read also: Bitcoin User Sends “Taxes Are Robbery” to German Government