South Korea has again deferred the implementation of the controversial 20% digital assets gains tax. The tax regime will now come into force in 2025 and not in 2023 as was previously planned.
Government officials, including Choo Kyung-ho, Deputy Prime Minister of Economy and Minister of Strategy and Finance, confirmed the postponement while presenting South Korea’s 2022 tax reform plan at a press briefing broadcasted by MBC News in July 20.
The officials stated that the government needed time to prepare investor protection measures and cited stagnant digital asset market conditions. Unfortunately, no changes are being made to the details of the tax regime.
The government still plans to tax gains exceeding KRW2.5 million ($1,900) in one year made from the trading, transfer, or lending of digital assets. In contrast, the tax reform plans proposed in the briefing will see the current tax burden on office workers and corporations reduced considerably.
“The tax system will be structurally reorganized to comply with tax principles and global standards, thereby optimizing the tax burden level of the people and laying the foundation for overcoming the crisis and upgrading the growth path, while creating a virtuous cycle of growth and tax revenue,” Choo said.
South Korea plans for digital assets regulations and taxation
This marks the second time South Korea has postponed the implementation of the tax regime. The regime was initially slated to come into force by October 2021 after being announced in January of the same year, but lawmakers delayed the plan until January 2022 and ended up postponing it until 2023.
The postponement was influenced by South Korea’s president-elect Yoon Suk-yeol who promised during his campaign that digital assets taxation would only come after regulations had been implemented to supervise the market. Yoon reiterated this back in May while revealing that his government is working on the Digital Assets Basic Act (DABA) bill.
Separately, South Korea’s National Tax Service introduced a tax on inherited or donated digital currencies starting this year.
Digital assets taxation has been on the agenda of a lot of governments. India has imposed a 30% gains tax and a 1% TDS tax regime on digital assets. Similarly, Germany and the U.S. have also reviewed their digital assets taxation regimes, with the former’s taxation body—the IRS—classifying the market as an enforcement top priority.
Watch: The BSV Global Blockchain Convention panel, Blockchain for Government Data & Applications
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
