South Korea’s plans for a new tax regime targeting cryptocurrency gains have hit a significant roadblock. The National Assembly’s Strategy and Finance Committee was scheduled to meet on November 29 to discuss proposed tax changes. However, the session was canceled due to ongoing disagreements between the ruling and opposition parties.
The proposed changes were set to address several areas, including tax adjustments on virtual assets, inheritance tax, and dividend income. The delay stems from disputes over 11 non-contentious tax bills. The ruling Democratic Party (KDP) sought to push these bills forward, but the opposition, led by the People’s Power Party (PPP), opposed this approach, blocking the meeting.
Also Read: South Korean National Assembly Delays Session Over Crypto Tax Dispute
Disagreement Over Crypto Tax Implementation Timeline
The heart of the debate lies in the timing of the cryptocurrency tax, with the KDP wanting to impose taxes on crypto gains starting in 2025, and the PPP opposing this plan and suggesting a delay until 2028. While the KDP proposes introducing taxes for crypto revenue from 2025, the PPP does not support this idea and proposes introducing it no sooner than 2028. When the KDP was not progressing in countering its coordinated opposition, it changed its offer.
Both extended the tax-exempt limit on virtual currency trading, raising it from 2.5 million won ($1800) to 50 million won ($3600). This revision would exclude those with minimal crypto income from tax and direct all its energy to people earning above-average profit from cryptocurrencies. This approach aligns with the general trend in the South Korean tax system whereby only investors earning more than fifty million won are subjected to tax.
It has become common to observe this deception concerning the time of formulating these regulations. The government wanted to enforce crypto taxes in 2021 but experienced some resistance and didn’t start until early 2023. However, the current delays have stretched it out to 2025; this might extend further depending on the political jiggery-pokery.
Despite the setbacks, the South Korean government remains determined to introduce the new crypto tax system by January 1, 2025, unless further political divisions force additional changes to the timeline. With cryptocurrency gaining popularity in South Korea, the government is under pressure to finalize the rules and address the growing demand for regulation in the sector.
Also Read: South Korea Confirms Crypto Tax Implementation for 2025 After Delays
