South Korea Mulls Crypto Tax Law Deferment for Two Years

South Korea’s ruling party might delay the implementation of crypto tax laws as “a general election pledge.”

by Brian Danga. Fact checked by: Ciaran Lawler, Editor: Stefan Trapp

Published: February 19, 2024 │ 12:55 PM GMT

South Korea placed a security dome on crypto coins in digital land. — *Created by Kornelija Poderskytė from DailyCoin*

South Korea’s ruling party wants to delay the implementation of a crypto law.
The party said the move was a “general election pledge.”
The law could be implemented in 2027 if the proposal passes.

South Korea’s ruling People Power Party has proposed to delay the implementation of crypto taxation laws for another two years.

Today’s development follows a similar move in 2022, which pushed the virtual asset taxation regime implementation from January 2023 to January 2025. The ruling party is seeking a second deferment as “a general election pledge” to allow the incoming government to establish a tax base for digital assets.

South Korea’s Crypto Tax Law Challenges

Under the latest tax reforms package approved in December 2022, South Koreans must pay income tax on gains realized upon the transfer, loan, or withdrawal of virtual assets. The law taxes worldwide virtual asset gains over $1,872 at a flat rate of 22%.

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On February 19, the Korea Herald reported the People Power Party argued that implementing the above regulations would be possible only when a “minimum system for taxation of virtual assets is established.”

To establish this “system,” the ruling party aims to propose the second phase of the Virtual Asset User Protection Act in the next parliament. The extrapolated legislation will cover various areas, including the definition of a deposit management business, the legal introduction of a listing system, and the establishment of a virtual asset stock exchange.

“Taxation is something the country should do to protect its people’s property and lives. However, the tax base has not been established right now,” the report quoted an official of the People Power Party. “I think there is a need for at least a two-year delay until the amendment is passed and such a system is actually built.”

If approved, the ruling party’s proposal will likely implement the crypto tax regime in 2027.