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A recent report revealed that the South Korean government is considering delaying the crypto gains taxation for a third time. Seemingly, investors in the country are growing concerned due to a lack of system and “market confusion.”
Crypto Taxation Could Be Delayed Another Three Years
A local media outlet reported that South Korean lawmakers have proposed postponing the enforcement of crypto taxation in the country again. Originally, the government proposed implementing a 20% tax on crypto gains by January 2022.
The new rule has been postponed twice, with the latest delay setting the implementation date to January 2025. If passed, the new bill, proposed by the South Korean ruling party, would push the crypto tax date to 2028, a six-year delay from the original date.
Taxation of cryptocurrency profits was scheduled to start in October 2021 after the National Assembly passed the related tax law during the Moon Jae-in administration. Considering the presidential election schedule the following year, the implementation date was postponed once to January 2023, and then again to January 2025 under the Yoon Seok-yeol administration.
The main reasons cited for the delays have been the “concerns about the burden on cryptocurrency investors and market confusion.” Reportedly, investors have expressed their worries about the lack of clarity, and complaints about the tax law have grown with the market retrace.
Per the report, the recent crypto trading volume has fallen significantly since Q1 2024. The daily trading volume in March was around 20 trillion won, worth $14.5 billion. This number has reduced to 2 trillion won since then.
Industry officers fear that daily trading numbers could lower even more if the taxation of cryptocurrency profits begins early next year. Many consider that with the tax law, “most investors will leave, and trading will further decline.”
South Korea’s National Assembly website acknowledges negative sentiment. Source: South Korea’s National Assembly.
New Postponement Could ‘Nullify’ Tax Law
Nearly 6.5 million people invested in cryptocurrencies in South Korea by the end of 2023. According to the Financial Services Commission, over half of the domestic investors are people in their 30s and 40s.
Per the report, politicians care about crypto investors because people in this age range also account for half of the country’s population. “Politicians are aware of the high public opinion leadership,” the report reads.
However, some Koreans have criticized the government’s decision to postpone the tax policy. Seemingly, many consider the country’s tax policy to be “too swayed by the public opinion of taxpayers.”
Some officers have refuted the claim that there’s still a lack of system and system maintenance for the proper crypto tax regulation. The rebutters oppose the new delay, highlighting that the government has postponed the tax law twice and has had three years to prepare for it:
The government is not doing what is necessary by calling for a ‘lack of preparation’ to postpone taxation once again. It means you didn’t do it.
Many worry that deferring the crypto tax a third time could nullify the law, pointing out that the arguments to postpone it, including the upcoming elections, could be used again with the 2028 elections.
The Ministry of Strategy and Finance revealed that “no decision has been made regarding additional postponement of virtual asset taxation.” The decision will be announced by the end of the month.
Bitcoin (BTC) is trading at $62,770 in the weekly chart. Source: BTCUSDT on TradingView
Featured Image from Unsplash.com, Chart from TradingView.com
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