South Korea's Ruling Party Contemplates Further Crypto Tax Delay Amid Election Campaign
This move is seen as an effort to provide clarity and stability to the local crypto industry.
South Korea's ruling People Power Party is reportedly exploring the possibility of extending the postponement of cryptocurrency taxation for an additional two years, potentially incorporating this proposal into its campaign for the upcoming general election in April.
According to a report by a local media outlet, Herald Business Daily, the conservative party aims to prioritize the establishment of a comprehensive regulatory framework for the cryptocurrency sector before implementing taxation measures on investors. This move is seen as an effort to provide clarity and stability to the local crypto industry.
The party emphasizes the importance of establishing a solid foundation for virtual asset taxation, including defining deposit management business, introducing a listing system, and establishing a virtual asset stock exchange. These measures are seen as essential for effective regulation and oversight of the virtual asset market.
While the first phase of the Virtual Asset User Protection Act focused on investor protection and damage prevention, the proposed second phase aims to address regulatory gaps and strengthen supervision over virtual asset transactions.
A party official highlighted the necessity of taxation to safeguard people's property and lives but underscored the need for a well-defined tax base. The absence of proper oversight mechanisms and income reporting practices in the virtual asset market necessitates a delay in taxation until regulatory reforms are enacted.
While the People Power Party considers adjusting the tax base, criticisms have been raised regarding the discrepancy between tax exemptions for stocks and virtual assets. Currently, the tax exemption threshold for stocks is significantly higher than that for virtual assets, leading to calls for a more balanced approach to taxation.
The debate surrounding cryptocurrency taxation in South Korea has been ongoing, with discussions extending to the possibility of abolishing income tax on crypto assets altogether. While there have been calls for a complete abolition of the planned taxation, the ruling party appears to be leaning towards maintaining the tax regime, albeit with potential adjustments.
In addition to contemplating a tax delay, the party is also exploring the alignment of crypto tax thresholds with those applicable to traditional stock investments. Currently, cryptocurrency gains exceeding 2.5 million Korean won ($1,875) are subject to a 22% tax, while stock gains are only taxed when they exceed 50 million won, highlighting the need for greater consistency and fairness in taxation policies across different asset classes.
