South Korea postpones 20% tax on crypto profits until 2025
South Korea postpones 20% tax on crypto profits until 2025
South Korean authorities postpone the controversial 20 percent crypto tax for the second time. Tax will be imposed from 2025
By Shashank Bhardwaj
Image: Shutterstock
The South Korean government has delayed plans to impose a 20 percent tax on all crypto income until 2025. On Thursday, the authorities announced their new tax reform plans, postponing the crypto tax policy until 2025, citing stagnant market conditions and the time needed to prepare the investor. protective measures.
The announcement comes after the country’s lawmakers delayed initial plans to tax virtual assets until 2023 in December. The original plan to impose an additional 20 percent tax on crypto winnings exceeding KRW 2.5 million ($1,900) in a year remains unchanged. Some reasons for the delay were attributed to the current global market outlook, which is generally negative. Lawmakers were also concerned about the time it took to prepare for investor protection measures.
Yoon Suk-yeol, South Korea’s president-elect, stated that imposing taxes without a clear basis to legally define crypto-assets in the country’s system would be inconsistent. As a result, it would be preferable to delay the tax until the crypto market matures and new legislation is thoroughly prepared to ensure transparency and investor protection.
The controversial 20 percent crypto tax was supposed to take effect in January 2022, but lawmakers in the country postponed it until 2023. It has now been postponed for another two years. According to South Korean blockchain lawyer Harold Kim, one reason for the 20 percent tax delay could be that small crypto investors would be unfairly targeted, given that the threshold for capital gains in the traditional stock market is much higher.
During the election campaign, Suk-yeol promised to abolish the capital gains tax to help retail investors and to delay the taxation of crypto assets for two years. According to President Yoon’s plans for the crypto and Web 3.0 ecosystem in South Korea, the Digital Asset Basic Act (DABA) will be introduced to lawmakers sometime in 2023. His stance came as politicians from both parties sought to appeal to voters from millennial and Gen Z. ahead of the presidential election.
Other countries that have implemented such crypto taxes have run into serious problems. Thailand proposed a 15 percent tax on crypto gains. However, retailers in Thailand were outraged by the new tax policy. The government was eventually forced to abandon the tax policy. As of April 1, India imposed a 30 percent tax on crypto. Heavy taxation has wreaked havoc on the country’s crypto exchanges, with trading volumes falling by more than 90 percent within weeks of the implementation of new tax laws.
Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash
