Published on June 11, 2024
By: Karin Interfector
South Korea’s National Assembly Research Service recently suggested that the cryptocurrency tax debate might be postponed again, and the proposal could even be scrapped altogether. This was reported by Hanguk Kyungjae.
The crypto tax was originally scheduled to take effect in January 2022. However, in late 2021, South Korean politicians postponed it for a year to enhance the country’s tax infrastructure… Subsequently, the political parties approved another delay, extending the implementation period until 2025.
As the country’s lawmakers prepare to vote on proposals to eliminate taxes on gold investments, the Legislative Research Service points out that such a move would discriminate against those who invest in stocks and cryptocurrencies.
“Lawmakers should consider fiscal equality and fairness when deliberating on abolishing the gold investment tax… It could be argued that the cryptocurrency tax should also be postponed or scrapped”.
Only six months are left until the tax rule takes effect, leaving South Korean investors uncertain. Many are hopeful that ongoing political tensions will result in another postponement.
The latest proposal suggests a flat 20% tax rate on crypto profits surpassing 2,500,000 won per year – roughly equivalent to $1,800. If left unaltered or delayed, this tax will take effect.
In early 2024, President Yoon Suk-yeol’s party pledged to postpone the tax implementation for a couple of years, provided they achieved good results in the April legislative elections. However, the ruling coalition was defeated by its rival, the Democratic Party (PD), complicating the rest of the president’s term.
Despite the opposition’s success in the last election, parties feel compelled to delay or abandon the crypto tax due to backlash fear from voters aged 20-39.
A recent report by Kaiko reveals that South Korean crypto trading volume has surged to its highest level in over two years. Notably, during the first quarter of 2024, the South Korean won surpassed the US dollar as the most traded fiat currency against cryptocurrencies. This surge can be linked to intense competition among exchanges, with companies like Bithumb and Korbit launching zero-commission campaigns to attract more users.
“In early March, South Korean markets saw their highest trading volume in over two years, driven by a stronger economy and fierce competition among local exchanges. By the first quarter of 2024, the South Korean won had even surpassed the US dollar in total trade volume”.
But getting back to the main topic… If the tax rule is approved, crypto users will need to report their profits from January 1, 2025, and pay taxes on them by May 2026.
In recent years, South Korea’s domestic investment hasn’t seen significant growth, leading many users to explore digital assets. Despite the country’s substantial demand in the blockchain sector, instruments like crypto ETFs are still far from reaching its borders.
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