South Korea postpones crypto tax plans again, this time until 2025
South Korea has once again delayed the implementation of a cryptocurrency tax regime. The profit tax of 20% will now come into effect in 2025.
South Korean authorities have decided to delay the taxation of the asset class until 2025, according to an official announcement. The 20% capital gains tax on cryptocurrencies was expected to take effect from early 2023 and gave some reasons for the delay. The tax plan was already delayed before.
The 20% tax will apply to crypto winnings that exceed $1,900 in a one-year period. Some market enthusiasts are offended by this rule, as they feel that it is too strict to tax gains above $1,900. Smaller investors in particular will be harmed by this particular threshold.
The rationale for pushing back taxation was that market conditions were stagnant and that it took some time to implement investor protection measures. The chairman of the tax subcommittee, Kim Young-jin, said that broader crypto regulation was generally needed before moving forward with taxation.
Korea’s focus on crypto tax has been the subject of discussion since 2021 when the country first postponed crypto tax until 2023. The decision to tax the asset class has been met with some criticism, although there was some relief that NFTs would be excluded from taxation.
When it comes to crypto regulation, the financial regulator in South Korea has stepped up its efforts considerably. The authority recently began investigating currency transactions in commercial banks for illegal use of cryptocurrencies. The investigation into Terra has also often made the headlines.
Cryptocurrencies have been on the minds of several countries in recent months. This is not surprising, given how quickly the market has grown and attracted investors over the past two years. After allowing the asset class to operate after much deliberation, these countries have turned to taxation to impose some form of control on the market.
India is among the many countries that have made the news for their tax efforts. The country imposed a hefty 30% tax rule on crypto from April 1 this year, a move that has significantly reduced the volume of trading that takes place.
The United States Internal Revenue Service (IRS) has also stepped up its surveillance game. It has worked with the US Treasury Department to ensure that cryptocurrency brokers and exchanges report customer data.
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