The 20% taxation on digital assets in South Korea that was supposed to be levied from 2023 has been delayed by another two years.
Tax Announced Back In 2020
Before the announcement of the 2-year delay, the hefty 20% tax on crypto-asset gains was supposed to come into action on January 1, 2023. However, thanks to the strong protests from investors, the plan has been pushed back till 2025. The proposal to levy a crypto tax was first presented in December 2020, when the government announced the 20% taxation rate on crypto gains above 2.5 million KRW (US$1,974.10). Under the initial plan, the tax was supposed to be imposed from January 1, 2022. However, the Democratic Party and the opposing right-of-center People Power Party decided in November 2021 to push it back one year.
Investors Protest Taxation
Despite the many delays, the January 1, 2023 schedule did not sit well with investors, who claimed that the tax could cripple a burgeoning crypto industry in S.Korea. Another argument presented by them was that the tax threshold (2.5 million KRW) was too low, especially considering that the proposed stock market tax kicks in on capital gains above 50 million KRW (US$39,475.76). This was worth noting as one of the promises made by the country’s president-elect, Yoon Suk-yeol, during his campaign was to tax crypto equal to other financial assets.
Minister Supports Postponing
The investors’ demand to push back the taxation was supported by Choo Kyung-ho back in May 2022, when he was yet-to-be-confirmed as the Deputy Prime Minister and Minister of Economy and Finance. During a National Assembly confirmation hearing, Choo had stated that a 20% tax on the crypto industry would be detrimental at the moment. He proposed waiting for the market to mature and for legislation ensuring transparency and investor protection before levying the tax.
Tax Policies Around The Globe
Taxing crypto capital gains has become a hot topic in many countries. While some countries want to unburden the industry as much as possible and have therefore held off on imposing a tax, others are keen to bank in on the profits through taxation. Germany, like South Korea, has upheld a more crypto-favorable tax policy after announcing zero taxes on crypto held for over a year. On the end of the spectrum, Portugal, which has been known to be a crypto haven for its zero tax policy, has been reconsidering a crypto gains tax. Investors in India, too, are overwhelmed by the 30% crypto tax announced in the last Budget meeting and are choosing to take their business abroad.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.