South Korea ruling party united in push for digital currency tax delay

South Korea ruling party united in push for digital currency tax delay

South Korean investors may have to wait a bit longer before they start paying taxes on their digital currency holdings. A new taxation regime was scheduled to take effect in January 2022, but according to local reports, the ruling Democratic Party of Korea (DPK) has reached a consensus to go against the government and push for yet another delay.

The South Korean government has been pushing to start levying a 20% tax on digital currency gains worth 2.5 million won ($2,125) starting on January 1, 2022. The tax was to take effect this week on October 1 initially. However, it was postponed for three more months to next year due to an insufficiency in taxation infrastructure for the still-nascent digital currency industry.

As CoinGeek reported recently, the ruling DPK party has been pushing for yet another delay, but the Finance Minister has played down the push

It now appears that the party could have its way and delay the tax, which a majority of Koreans support. According to the Korea Times, the party has reached a consensus to push for legislative changes to delay the implementation for at least one more year. 

For the DPK party, the latest push is mostly politically motivated. The party is out to lure the younger generation, mostly in their 20s and 30s who have invested in digital currencies. South Korea is set to hold its presidential election in March next year, making it even more pertinent for the party to lure investors. The party, which has been the most popular, has been losing its support in light of some disastrous policy moves by the outgoing President Moon Jae-in, especially in the real estate industry.

“The DPK reached a broad consensus in terms of delaying the timing of the taxation of cryptocurrency transactions for another year than earlier planned,” a source at the party told the Korea Times.

Aside from delaying the tax, the party is seeking to introduce some amendments, the source revealed. One of these is the minimum deductible amount which DPK insists is too low. For Korean investors with over 60% of their investment in stocks, the maximum deductible amount is 50 million won ($42,170).

“The amount of tax will be determined by the legal definition of the digital asset. We understand that the difference in the amount deductible between 50 million won and 2.5 million won is unfairly large to many investors,” Rep. Yong Doo-soo, the head of the DPK’s task force on digital currencies revealed.

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