South Korea postpones crypto tax until 2025
South Korean authorities have once again postponed the introduction of crypto tax until 2025, mentioned in the official announcement. This new proposal is in line with the view of new president Yoon Suk-yeol, who is of the opinion that crypto taxation is secondary.
The main task is to ensure that the market infrastructure is in place. Once the market infrastructure is established, the taxation of the asset class will be imposed. The 20% capital gains tax on crypto was originally expected to take effect from early 2023.
After that decision, there have been several reasons for the delay in imposing digital wealth tax. The tax plan was already delayed before. Now the new president has decided to postpone taxation for another two years.
Once this reform is accepted, the crypto tax will be implemented in the year 2025. A 20% tax will be applied to crypto gains that exceed $1,900 in one year. Market enthusiasts are not entirely on board with the decision as they feel that taxation above the $1,900 mark is a bit harsh. There are chances of small investors being adversely affected by the same.
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Reason for crypto tax delays was due to volatile market conditions
The South Korean officials recently announced these new tax reforms, the main reason behind the reformation is the market volatility. For taxation to be imposed, the market must be stable along with the time needed to develop policies that will be aimed at protecting investors. The plan to impose an additional 20% tax on crypto winnings above $1,900 (2.5 million won) remains unchanged.
Crypto taxation has been a priority for the government as the industry has grown tremendously in recent years. Thailand had also proposed a 15% crypto profit tax, but it had received flak from retailers forcing Thai authorities to do away with this policy.
Financial regulators have been working to strengthen crypto regulation
Financial regulation of crypto South Korea has always been in focus and now they are finding ways to strengthen the same. In recent times, the authority has begun to investigate currency transactions at commercial banks that are used for the illegal use of the digital asset.
South Korea is also concentrating on the “Digital Asset Basic Act” which is a regulatory framework for the digital asset ecosystem in the country. This law may be introduced in the year 2024. It must also be taken into account that the reform of the crypto tax regime is in line with the economic-political road map. It also mentions that the upcoming Digital Asset Basic Act should regulate ICOs and the listing of cryptos.
In addition, this delay of the planned tax on the industry is part of the wider tax reform to help business investment.
Finance Minister Choo Kyung-ho has also mentioned,
The government plans to help businesses actively expand investment and create jobs… If the tax cut increases economic vitality, this will support economic growth and increase tax revenues in the long term. Then we can achieve the goal of strengthening fiscal policy
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Featured image from OhFact, and chart from TradingView.com
