Korea considers additional postponement of cryptocurrency taxation ahead of general elections
South Korea’s ruling People’s Power Party has suggested that there is a possibility of delaying the implementation of cryptocurrency investment income taxation again and extending the implementation date until 2027.
This measure is part of the Grand National Party’s election strategy ahead of the general election in April. The party emphasized the need for a basic regulatory framework for cryptocurrencies ahead of taxation. This includes plans to introduce new regulations for the cryptocurrency industry, focusing on cryptocurrency custody providers and token listing requirements.
These proposed regulations aim to complement South Korea’s initial cryptocurrency regulations, which will come into effect in July.
The decision to postpone the cryptocurrency income tax, originally scheduled to begin in January 2023 and later rescheduled to January 2025, reflects the party’s willingness to carefully structure the regulatory environment before imposing the tax. The Democratic Party is expected to finalize its key election promises by the end of this month.
Amid these developments, a representative from the Ministry of Strategy and Finance last month hinted that there may be discussions within the country’s legislature about abolishing income tax on cryptocurrency assets. The discussion is consistent with the administration’s broader plan to eliminate taxes on financial investments, including stocks and funds. However, according to Herald Economy, the People Power Party is not considering a plan to completely abolish cryptocurrency taxation.
The party also advocates for a fairer tax system, proposing aligning the cryptocurrency tax base with that of stocks. Under the current plan, cryptocurrency profits exceeding 2.5 million won ($1,875) would be taxed at 22%, while stock profits would only be taxed if they exceed 50 million won.
Last December, Korea announced a policy mandating high-ranking public officials to disclose their cryptocurrency holdings starting the following year. This policy aims to mitigate potential conflicts of interest and maintain ethical standards among public officials.
In addition to these domestic initiatives, South Korea’s head of financial oversight, Lee Bok-hyun, plans to participate in discussions with U.S. SEC Chairman Gary Gensler focused on the cryptocurrency industry, particularly spot Bitcoin ETFs.