South Korean regulators agree to postpone the 20% crypto tax for two years, after rejecting the Democratic Party’s proposal to raise the annual tax threshold from 2.5 million won to 50 million won.
According to local media outlet Money Today, Democratic Party floor leader Park Chan-dae announced at a press conference that the DP has agreed to the government’s plan to postpone the tax on crypto traders for another two years, pushing back the bill intended for 2025 to 2027.
Park said that the government needs “more institutional preparation” before regulators can systematically begin to tax crypto traders.
“After in-depth discussions on the postponement of taxation on virtual assets, I thought that now is the time for additional institutional overhaul,” said Park.
The National Assembly will vote on Dec. 2, 2024 to decide the fate of South Korea’s crypto tax proposal, with both parties in agreement to postpone the tax.
Initially, the DP had opposed the People’s Power Party’s plans to postpone the launch, insisting that the 20% tax on crypto traders must be launched in January 2025. In addition, the DP had also proposed raising the annual tax threshold from 2.5 million won ($1,781) to 50 million won ($35,633).
But the government had rejected the main opposition party’s proposal, instead voting in favor of PPP’s motion to delay the crypto tax to 2027.
Additionally, Park said that there is still room for negotiations regarding the 13 bills proposed by the government, which include the crypto tax bill, the inheritance bill and the gift tax bill among others. This means that the 20% tax on crypto traders earning a profit minimum of 2.5 million won is still subject to change.
“If the government does not take any action, an even greater reduction is possible with the revised plan [which modifies the current reduction plan],” said Park.
This marks the third time the South Korean government has decided to postpone the virtual asset tax bill. It was first introduced in December 2020 and scheduled for implementation as early as 2021, but then the bill was delayed to 2025. Now, it has a very strong chance of being postponed even further to 2027.
The law would implement a 20% tax with an extra 2% local tax towards profits exceeding 2.5 million won or around $1,781.
Several major crypto exchanges argued against the 2.5 million won threshold, saying that a 20% tax on the basic deduction would make trading volumes plummet.
