South Korea has announced plans to tax cryptocurrency gains starting January 1, 2025, after postponements from the original 2022 rollout. The decision was reaffirmed by Jin Seong-jun, Chairman of the Policy Committee for the Democratic Party of Korea (DPK), during a recent radio interview.
He emphasized the importance of establishing a clear legal framework and ensuring financial stability as the country prepares for this policy shift.
The new tax policy will impose a 20% tax rate on profits from cryptocurrency transactions, rising to 22% when local taxes are added. Although the framework covers domestic transactions, issues arise in detecting and levying international-related cryptocurrency actions.
Also Read: South Korea Intensifies Crackdown on Crypto Tax Evasion Ahead of New Tax Framework
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DPK Proposes Higher Tax Exemption Thresholds to Benefit Investors
The Democratic Party of Korea (DPK) has proposed raising the tax exemption limit for digital asset gains to relieve investors. Under the current framework, profits below 2.5 million Korean won (approximately $1,795) are exempt from taxation. The proposed adjustment would increase this threshold to 50 million won (approximately $35,900). This change aims to offer more flexibility for smaller investors while maintaining the broader integrity of the tax system. The proposal is set to be discussed at the Strategy and Finance Committee meeting on November 26.
There are also attempts to solve problems associated with taxing cross-border transactions. Cryptocurrencies used in domestic transactions can also be easily monitored, though cross-border use has been challenging. To mitigate these issues, the government plans to delay taxing overseas transactions until 2027, when monitoring tools are expected to be more effective.
Conclusion
Despite suggestions to delay the implementation further, South Korea remains firm on its 2025 crypto tax rollout. Authorities view the policy as crucial in maintaining financial stability and aligning digital assets with broader tax regulations.
Also Read: South Korea Enables Crypto Exchanges to Suspend Transactions Under New Law
Maxwell Mutuma
Maxwell is a crypto-economic analyst and Blockchain enthusiast, passionate about helping people understand the potential of decentralized technology. He writes extensively on topics such as blockchain, cryptocurrency, tokens, and more for top publications such as Coingape, Coin Edition, and The Coin Republic. His goal is to spread knowledge about this revolutionary technology and its implications for economic freedom and social good.