South Korea’s right-wing People Power Party is pushing to postpone taxes on crypto gains for an additional three years.
“Given the declining investor sentiment towards virtual assets, which are high-risk and more likely to incur losses than stocks, it is widely accepted that hasty taxation could drive most investors away. Therefore, we propose delaying the taxation of virtual asset income, currently set to begin on January 1, 2025, to January 1, 2028,” the proposed bill states.
The proposal to delay taxes is not new. Initially announced in January 2021, the proposed crypto tax rules required investors with annual gains exceeding 2.5 million won (approximately $1,900) to pay a 20% tax. This is lower than the tax on stock market gains, where only amounts exceeding 50 million won (about $37,400) are taxable.
Citing problems in the information-gathering processes by the National Tax Service, lawmakers postponed the crypto tax implementation to 2023. In July 2022, the government delayed the tax plan by another two years.
It now rests on the Ministry of Economy and Finance to approve the latest proposed postponement until January 1, 2028.
The People Power Party, of which President Yoon Suk-yeol is a member, vowed during the last general election in April to delay the crypto gains tax.
South Korea experienced its first major crypto boom in 2017, with another surge before the collapse of Luna and TerraUSD in May 2022.
Currently, there’s no specific regulatory framework for taxing virtual assets, although Initial Coin Offerings (ICOs) remain banned, and cryptocurrency mining activities in South Korea are also limited.
Meanwhile, South Korea’s left-wing Democratic Party, in its 2024 election manifesto, pledged to allow both domestic and U.S. spot Bitcoin ETFs. The U.S. approved spot Bitcoin ETFs in January. Other jurisdictions like Hong Kong and Australia also launched Bitcoin ETFs in 2024.
