South Korea Proposes Delaying Crypto Gains Taxation to 2028

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As a long-term crypto investor based in South Korea, I have witnessed the ongoing debate surrounding the proposed cryptocurrency taxation and its potential impact on our community. Having closely followed the developments since the initial proposal of a 20% tax on crypto gains back in January 2022, I cannot help but feel disheartened by the continued postponements, now with another suggested delay until 2028.

The South Korean government has put forward plans to postpone the initiation of cryptocurrency taxation until 2028 – marking the third delay since early 2022. The People Power Party, currently in power, advocates for holding off on implementing this tax due to potential negative impacts on the crypto market and investor morale. A bill submitted to the National Assembly by the party argues that a significant number of crypto investors might exit the market if the taxation policy is enforced.

The proposed crypto tax rate by the South Korean administration was set at 20%, originally planned to take effect on New Year’s Day, 2022. However, this plan faced significant opposition from the crypto community and was subsequently postponed twice – now slated for implementation in January 2025.

Concerns among Crypto Investors

Concerns amongst crypto investors in the country have escalated due to uncertainties regarding crypto taxation and its implications on gains, potentially influencing the values of prominent cryptocurrencies.

According to a report by Hankyung, the daily trading volume on our domestic exchange, which was approximately 20 trillion won in March, has dropped down to the 2 trillion won range. This decline serves to underscore the potential impact of the proposed crypto tax if implemented, which could further decrease the trading volume.

If the cryptocurrency income tax gets implemented next year, many investors may choose to depart due to this development, resulting in less trading activity.

In South Korea, the proposed cryptocurrency tax and taxes on financial investments are under review together. Previously, the government announced plans to abolish taxes on income derived from financial investments. However, recent developments suggest a reconsideration of this decision. The uncertainty surrounding both taxes has raised concerns among crypto investors, who fear potential disparity in treatment compared to other investment sectors.

Advocates of the postponed taxation insist that the current system and regulatory infrastructure for taxing cryptocurrencies require enhancement. They argue that secondary legislation needs to define crypto trading and explicitly categorize it as a specific business sector within the industry. Nevertheless, some contend that the government has had ample time to prepare, given that they have had three years since the initial delay. These individuals maintain that the government should have used this time effectively to devise a well-thought-out plan.

“After delaying the rollout twice within a three-year preparation period, it would be unjustified for the government to cite ‘insufficient preparation’ as an excuse for further postponing taxation.”

As a crypto investor, I’ve been keeping an eye on the news regarding cryptocurrency taxation. The Ministry of Strategy and Finance has not made a definitive decision yet about postponing the implementation of these taxes. They have stated that they will announce their position on the tax code by the end of this month. So, we’ll just have to wait and see what they decide.

As the general election approaches in April 2028, concerns persist about potential postponements in the implementation of cryptocurrency taxation policies due to possible shifts in political opinion.

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2024-07-15 13:05