South Korean Political Party Wants to Delay Crypto Tax Implementation Until 2028
South Korean Political Party Wants to Delay Crypto Tax Implementation Until 2028
The People Power Party (PPP), currently in power in South Korea, has proposed a three-year delay in the implementation of a tax on cryptocurrency gains. The proposal was submitted on July 12, 2024, noting that the current sentiment towards crypto assets is deteriorating. The description states that imposing a tax on crypto assets is "not advisable at this time."
Furthermore, the proposal reveals that most investors are expected to leave the market if the country imposes an income tax on assets that carry higher risks than stocks, such as cryptocurrencies.
South Korea Plans to Implement a Tax on Crypto Gains
South Korea's Ministry of Economy and Finance initially planned to impose a 20% tax on crypto gains exceeding KRW2.5 million (approximately $22,000), plus a 2% local income tax. This plan was originally scheduled to take effect on January 1, 2022, but has been postponed twice until January 1, 2025, due to strong backlash from crypto investors.
Before the general election in April 2024, the PPP promised to delay the implementation of the crypto gains tax as part of their campaign. If this proposal is approved by the National Assembly of South Korea, the tax implementation will be delayed until 2028, marking the third postponement by the government.
According to the Korea Economic Daily on Monday (July 15, 2024), the Ministry of Economy and Finance is still cautious and has not committed to further delays. However, an announcement regarding potential amendments to the crypto tax implementation is expected by the end of July.
South Korea is one of the largest and most active crypto markets in the world. About 6.5 million of its citizens, accounting for 12.5% of the country's population, were reported to have used crypto by the end of 2023. Additionally, recent data from Kaiko showed that the South Korean won surpassed the US dollar as the most used currency for crypto trading in the first quarter of 2024.
Conclusion
The proposal by South Korea's ruling People Power Party (PPP) to delay the implementation of a cryptocurrency gains tax until 2028 highlights the government's cautious approach towards the burgeoning and volatile crypto market. Given the current negative sentiment towards crypto assets and the potential for a mass exodus of investors if a tax is imposed, the PPP's proposal aims to stabilize the market and protect investor confidence. The repeated delays in tax implementation, coupled with the significant role of cryptocurrencies in the South Korean economy, underscore the complexity of integrating such assets into the existing tax framework without disrupting market dynamics.
As one of the world's largest and most active crypto markets, South Korea's handling of cryptocurrency taxation will be closely watched by global stakeholders. The Ministry of Economy and Finance's cautious stance and the expected announcement regarding potential amendments later in July indicate that the government is carefully weighing its options. With 12.5% of the population engaged in crypto trading and the South Korean won becoming a leading currency for crypto transactions, the outcome of this proposal will have significant implications for both the domestic and international crypto landscape.
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*Disclaimer:
This content aims to enrich reader information. Always conduct independent research and use disposable income before investing. All buying, selling, and crypto asset investment activities are the reader's responsibility.
