South Koreans’ crypto tax law has been pushed back by one year and will not go into effect until early 2023. On Tuesday, the 30th of November, the South Korean National Assembly approved the delay of the crypto tax law amendment. The tax law was to impose a 20% levy on cryptocurrency profits exceeding 2.5 million won before 2023. This gives crypto traders a reprieve as they will be trading crypto assets without being taxed on the crypto capital gains for at least one year to January 2023.
The ruling party and the opposing conservative party were on the same side in creating a partial amendment that will see a 20% levy on crypto profits delayed. Major media outlets reported that the politicians’ move at the plenary session assured the delay of crypto tax and the move to 2023 is “de facto done.”
Maeil Kyungjae, Sports Seoul and SBS all argued that the last hindrance on the crypto issue that has caused a backlash among crypto investors is now on sight. The finance committee was expected to be up for a vote on the 2nd of December. Based on the media reports, the Korean National assembly appears to have a consensus for the need to delay the crypto tax law, making it more likely that the amendment will pass during the awaited voting session on December 2.
The Democratic Party and conservative PPP lawmakers proposed to delay the crypto tax, citing that the taxation infrastructure was not fully equipped to exercise levy on crypto investors. For instance, the Korean government is yet to create protective measures for virtue assets investors lending the taxation premature. They also cited the move as an attempt to win more voters from the younger generation heavily invested in crypto assets.
The 20% levy issue had become a national issue. Earlier November, the presidential candidate Lee Jae-myung announced that he would push for a crypto gain tax delay. Significantly, the government had drafted a bill that proposed flat-fee 20% tax on trading gains over $2100, which the committee had earlier signed on and meant to launch on 1st January 2021.
However, the tax is unpopular among the crypto community and the investors continue to condemn the tax plan. Due to the heightened criticism, the Democratic and People’s Power Party decided to delay the tax instead of risking their ire during the election. A nominee from the ruling party hinted that could be more reforms on the amendment before it is enforced.
In reality, taxing crypto gain without putting the right measure in place is against fair taxation. South Korean tax authorities should fix taxation issues during this one year. On the other hand, the National Assembly Strategy and Finance Committee should meet crypto investors’ demands before 2023.