South Korea agrees to another 2-year ‘crypto’ tax delay

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A push to extend the grace period before a new digital asset taxation framework takes effect has received bipartisan support in South Korea.

South Korean lawmakers first agreed to a 20% tax on digital asset income in 2020, and it was scheduled to take effect in 2025. However, the issue became political, and since then, lawmakers have been using the pledge of a delay in implementation to drum up political support from the youth.

Two weeks ago, members of the opposition Democratic Party (DP) decided they had had enough and pledged to ensure the taxes are implemented next year. However, the latest reports from South Korea reveal that the party has caved to the will of the ruling People Power Party (PPP) and consented to another postponement.

“We have decided to agree to a two-year moratorium on the implementation of the cryptocurrency taxation proposed by the government and ruling party,” DP’s floor leader, Rep. Park Chan-dae, said in a press conference on Sunday, as reported by the local paper Korea Herald.

In its previous stance, the opposition party had criticized the government for dangling the delays to the public as a campaigning tactic.

“Crypto tax was voted into law four years ago. Its launch has been postponed twice since then. But it is now time to launch the tax for the sake of legal stability,” one of DP’s lawmakers said.

DP, which controls the National Assembly, had also proposed raising the tax threshold from the proposed $1,800 to $36,000, aligning it with stock market income to further cushion retail traders.

However, the party has changed its tune. It now says that Korean authorities have not prepared enough for the new framework. The party also concluded that the delay could further boost the nascent industry, which has been dominated by retail traders. These traders would have been the most affected by the new tax regime.

While South Korea struggles to implement the new taxation framework, Russia has had no such qualms. The two legislative houses passed a new law that caps the taxes at 15%, similar to stocks, and President Vladimir Putin signed it into law days later.

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