Cryptocurrency companies in South Korea will have some breathing room before they start paying capital gains tax as the government has decided to postpone its implementation for two years.
South Korean lawmakers agreed not to impose a tax policy on cryptocurrencies next year, moving its implementation to 2027.
Cryptocurrency tax policy delay
For the second time, the South Korean authorities announced that capital gains Tax on cryptocurrencies Which was scheduled to be introduced in January 2025, will not go ahead.
The current political situation in the Asian country makes it difficult to implement next year and it must be postponed until 2027.
Democratic Party of Korea bloc leader Park Chan-dae said on Sunday that they had reached an agreement Agreement to defer taxes On profits from cryptocurrency trades.
“We have decided to agree to a two-year moratorium on the implementation of cryptocurrency taxes proposed by the government and the ruling party,” Park said of the cryptocurrency tax scheduled to take effect in January 2025.
the Suspension for two years It was agreed despite reports that the Kurdistan Democratic Party and the ruling People Power Party had reached a political agreement that favored a more flexible approach to taxing cryptocurrency gains.
Earlier, the People Power Party proposed postponing the imposition of new taxes on cryptocurrencies until January 2028.
Increase tax deductions
Previously, the Democratic Party was opposed Tax endowment It offered an alternative to increased tax cuts.
Under its initial proposal, lawmakers proposed raising the tax exemption from the threshold of 2.5 million won to 50 million won, with the aim of implementing the law without any delay.
As of today, the market cap of cryptocurrencies stood at $3.37 trillion. Chart: TradingView
However, on Sunday, the party agreed with other South Korean lawmakers to postpone the implementation date.
Meanwhile, Park made it clear that her party would not agree to the government’s legislative measures on inheritance and gift tax bills that would “benefit the wealthy.”
the South Korean government He wanted to reform the country’s inheritance tax law that would impose a lower tax rate of 50% to 40% while increasing deduction thresholds for children who inherit from parents.
Image: Freeman Law
Evaluate the impact of the law
Park said delaying the introduction of the law by two years would give lawmakers in the South Korean government ample time to evaluate the impact of taxation on profits earned from digital assets.
Likewise, cryptocurrency traders will still have an additional two years to prepare before being charged the income they earned from trading virtual currencies.
Once implemented, cryptocurrency investors in South Korea will have to pay a 20% capital gains tax on trading in digital assets.
The South Korean government aims to impose a tax on cryptocurrencies in 2021 but delayed until 2023 for fear of its negative impact on the local cryptocurrency market.
The expected implementation of 2023 was later postponed and was supposed to be imposed in January next year. But once again, the timeline has been moved to 2027.
Featured image from DALL-E, chart from TradingView
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