South Korean Draft Law Could Delay Crypto Tax for a Further 3 Years

crypto tax South Korea

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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July 15, 2024 19:30 EDT

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A new South Korean draft law could delay the launch of crypto tax, meaning traders may avoid paying tax on their profits until 2028.

Under existing law, South Koreans will start paying a flat 20% rate on profits worth over an annual threshold of $1,800 from January 2025.

However, several lawmakers have pledged to “review” this law this year, all citing a multitude of reasons.

And now it appears, MPs are making a concerted effort to delay the launch of crypto tax until January 2028 at the earliest.

Delay Crypto Tax Star Date, Say Lawmakers

Multiple South Korean media outlets, including EDaily and TokenPost, reported that over a dozen lawmakers have proposed a bill that would “partially amend” existing tax laws.

This group reportedly includes Song Eon-seok, the chairman of the National Assembly’s Strategy and Finance Committee.

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Song, a member of President Yoon Suk-yeol’s People’s Power Party (PPP), is the MP for Gimcheon, in South Gyeongsang Province.

Song and his fellow signatories say they are concerned that introducing taxes on crypto traders will scare many away from the domestic market. The lawmakers were quoted as explaining:

“Investment sentiment in the virtual assets sector is on the decline. [We] expect that most investors will exit the market if taxes are imposed. This is due to the nature of virtual assets, which are high-risk assets. They are riskier investments than stocks.”

They claimed that there was now “an opinion” that the “hasty” introduction of crypto tax was “not desirable.”

Song explained that the tax system was not yet ready to start dealing with crypto tax declarations. He said:

“Many domestic experts believe that the self-reporting system and support networks for virtual asset taxation are not in place. So if taxation is hastily implemented starting next year, it will cause considerable confusion in the [crypto] market.”

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— Bloomberg (@business) July 15, 2024

Are Tax Delays a Bid for Popular Support?

Crypto tax has become a political football in South Korea. It was originally scheduled to launch in 2022.

But the launch has already been postponed twice. Ostensibly, this has been due to the tax administration’s failure to prepare.

However, tax officials have previously issued statements suggesting they are indeed ready to start collecting crypto-related taxes.

Instead, the issue has been used as a vote-winner in elections, with political parties promising voters tax delays in their manifestos.

Young South Koreans are exceptionally crypto-keen, and many have bemoaned previous governments’ hard-line stance on crypto regulation.

While the PPP earlier this year pledged a delay, the Democratic Party (DP) – the biggest party in the National Assembly – has previously promised to boost the annual tax threshold to over $36,000.

This would give crypto trading parity with stock trading. The DP has also pledged to allow crypto traders to defer losses for up to five years.