South Korean Opposition Challenges Crypto Tax, Pushing for Delay Until 2023

The opposition party in South Korea’s National Assembly is looking to revise the recently announced enforcement on cryptocurrency taxes.

The opposition People Power Party are composing a revision to the cryptocurrency tax expected to take effect on January 1, 2022. The bill proposes a one-year delay for crypto gain taxation to 2023. “It is not right to impose taxes first at a time when the legal definition of virtual currency is ambiguous,” Rep. Cho Myoung-hee of the People Power Party said. 

The bill also offers a more generous tax redemption than currently planned. For instance, it suggests imposing a 20% tax rate on profits between 50-300 million won ($42,000-$251,000) 

and 25% for profits above 300 million won. Under the current plan, the government would levy a 20% tax on cryptocurrency capital gains above 2.5 million won, roughly $2,100.

This proposed amendment is in line with the Financial Investment Income Tax, which is also scheduled to be implemented in 2023. “The intention is to ease the tax base to the level of financial investment income tax, so that virtual currency investors do not suffer disadvantages,” the Representative added. The opposition may submit the bill as early as this week. 

Korea’s crypto tax

Last week, South Korean Deputy Prime Minister and Finance Minister Hong Nam-ki announced that the nation’s cryptocurrency tax rules would be enforced starting in January. In spite of  the opposition, the government however is standing firm on carrying out the taxation plan. Hong Nam-ki downplayed the possibility of delaying taxation during a parliamentary hearing last week. “It is difficult to delay taxation on virtual assets in terms of policy reliability and legal stability,” Hong said.

In order to best track and tax cryptocurrency in South Korea, the Financial Services Commission decided that all cryptocurrency exchanges must register with the government and report transactions as requested. Meanwhile, dozens of exchanges have closed up shop in recent weeks, as only four completed the registration process.

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