South Korea looking to delay crypto tax amid concerns over asset discrimination
The current law, set to take effect in January 2025, taxes income from virtual assets beyond 2.5 million won (currently $1,870 USD) at 22%, including local tax, compared to a 50 million won exemption for equities income. This disparity has prompted calls for a more balanced approach to asset taxation, acknowledging the complexities of determining investment amounts and gains in the virtual asset market.
The People Power Party, South Korea’s ruling party, is advancing a proposal to delay the taxation of virtual assets for an additional two years, positioning this as a key promise ahead of the general election, according to a Herald Corp report.
This development follows a previous postponement that pushed the initiation of virtual asset taxation to January 2025 and highlights the party’s commitment to instituting a solid tax foundation for virtual assets in alignment with the principle of taxing after a selection fee is established.
In efforts to establish a viable taxation framework for virtual assets, the People Power Party plans to introduce the second phase of the ‘Virtual Asset User Protection Act’ during the 22nd National Assembly. This initiative aims to define deposit management business operations, legally introduce a listing system, and establish a virtual asset stock exchange. These measures are seen as foundational to the fair and effective taxation of virtual assets.
The proposal addresses concerns raised by the initial ‘Virtual Asset User Protection Act,’ which focused primarily on investor protection and penalizing fraudulent activities. The upcoming legislation is expected to enhance user deposit management, mandate the separate storage of virtual assets, and further regulate market transactions to ensure transparency and fairness.
50 million won exemption for equities vs 22% tax on crypto above 2.5 million won
A key official from the People Power Party emphasized that taxation should serve to protect citizens’ property and lives, suggesting that an established tax base is currently lacking. This absence of a robust system to oversee virtual asset transactions, akin to the stock exchange, has been identified as a critical gap. The party views the proposed delay in taxation as essential to developing the necessary infrastructure to support effective regulation and taxation of virtual assets.
Additionally, the People Power Party is considering adjustments to the tax base for virtual assets to address criticisms of tax discrimination. The current law, set to take effect in January 2025, taxes income from virtual assets beyond 2.5 million won (currently $1,870 USD) at 22%, including local tax, compared to a 50 million won exemption for equities income. This disparity has prompted calls for a more balanced approach to asset taxation, acknowledging the complexities of determining investment amounts and gains in the virtual asset market.
As the People Power Party finalizes its central pledge for the general election by February, the proposed tax deferral and regulatory adjustments signal a significant shift in the party’s approach to the burgeoning virtual asset market. This initiative reflects a broader effort to reconcile the innovative potential of virtual assets with the need for fair taxation and robust user protection.
