In a significant move, South Korea’s ruling People’s Power Party has officially proposed delaying the implementation of the country’s tax on cryptocurrency trading profits. The proposal, submitted on July 12, suggests postponing the tax from its original start date of January 1, 2025, to January 1, 2028.
The party’s proposal highlights the current negative sentiment towards crypto assets and argues that rapidly imposing taxes on virtual assets is “not advisable at this time.” They contend that the high risks associated with crypto investments, compared to stocks, may drive investors away if an income tax is imposed too soon.
This move aligns with the People’s Power Party’s campaign promises made during South Korea’s general elections in April. The party had pledged to delay the crypto gains tax by two years, emphasizing the need to first establish a comprehensive crypto framework. They argue that a well-defined system should be in place before any taxation occurs.
A party representative also pointed out that unlike the stock market, no regulatory bodies currently oversee crypto transactions. Developing such a regulatory framework is seen as a necessary step before implementing the tax.
The plan to tax crypto gains in South Korea has faced multiple delays. Initially set to take effect in 2021, it was first postponed to 2023 following industry backlash, and then to 2025 due to concerns about investor interests. If the current proposal is approved, the tax implementation will be delayed by nearly seven years from its original schedule.
Under the proposed tax regime, South Korean investors would face a 20% capital gains tax on annual gains exceeding 2.5 million won (approximately $1,800). This threshold is significantly lower than that for stock gains, which are taxed only if they exceed 50 million won (about $36,000).
South Korea’s ruling party’s push to delay the crypto tax until 2028 reflects ongoing debates about the best approach to regulate and tax the rapidly evolving cryptocurrency market. As the proposal moves forward, it will be crucial to watch how stakeholders and investors respond to this significant policy shift.
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