South Korea’s ruling party, the People’s Power Party, has officially proposed a significant delay in the implementation of the country’s tax on cryptocurrency trading profits. Originally set to take effect in January 2025, the new proposal suggests pushing the date back to January 2028, nearly seven years from the initial schedule.
Reasons for the Delay
The proposal submitted on July 12 highlights the deteriorating sentiment towards crypto assets among investors. The People’s Power Party emphasized that imposing taxes on virtual assets rapidly is “not advisable at this time,” pointing out the higher risks associated with cryptocurrencies compared to stocks. The party fears that an immediate tax imposition might drive investors away from the crypto market.
Fulfilling Election Promises
Leading up to South Korea’s general elections in April, the People’s Power Party had pledged to delay the crypto gains tax implementation. On February 19, the party argued for the necessity of establishing a comprehensive crypto framework before initiating taxation. The proposal underscored the need for a solid regulatory foundation to oversee crypto transactions, a system the party believes requires at least two more years to develop.
History of the Crypto Tax Delay
The plan to tax crypto gains in South Korea has faced multiple postponements. Initially scheduled for 2021, the implementation was first delayed to 2023 due to backlash from industry leaders and stakeholders. The government then pushed the date further to January 2025, citing concerns over protecting investor interests. If the current proposal is approved, it will mark a nearly seven-year delay from the original timeline.
Taxation Details
In South Korea, cryptocurrency investors are required to pay a 20% capital gains tax on annual gains exceeding 2.5 million won (approximately $1,800). This threshold is significantly lower compared to stocks, where gains are only taxed if they exceed 50 million won (about $36,000). The ruling party’s proposal aims to align the taxation process with a more structured and investor-friendly approach.