• Wed. Apr 24th, 2024

South Korea’s Ruling Party Pushes For 2-Year Delay Of Crypto Tax

Steve Kornacki

BySteve Kornacki

Feb 19, 2024
South Korea's Ruling Party Pushes For 2-Year Delay Of Crypto Tax

Strategizing For Election

Ahead of the April 2024 general election, the People Power Party, which currently holds power in South Korea, has launched initiatives to postpone the taxation on crypto gains for an additional two years. Per multiple reports, the ruling party stressed the importance of developing a robust regulatory framework for cryptocurrencies before moving forward with taxation.

The party claims that establishing a sound strategy for the sector is a precondition for implementing any tax policies. Essentially, they propose a systematic approach in which a broad framework is established to manage all the dynamics of the cryptocurrency ecosystem, ensuring clarity and stability.

The party further emphasizes the importance of a well-defined regulatory framework in guiding cryptocurrency tax laws. They believe taxation should be considered after this core framework is in place, as it provides a disciplined and logical basis for handling the problems of taxing crypto assets.

Observers believe this approach illustrates the party’s commitment to creating a fair and informed regulatory environment for South Korea’s expanding cryptocurrency industry.

Implementing A Tax Base

In addition to the postponement proposal, a party representative cites the absence of a defined tax base for cryptocurrencies, as found in the stock market. The official commented on the lack of a regulatory body regulating cryptocurrency transactions, underlining the importance of a comprehensive framework.

The party believes two years is enough to establish the groundwork for such a regulatory structure. Furthermore, the ruling party’s officials stressed that tax remittances are important in protecting the residents’ well-being.

Concerned about the government’s apparent disregard for the crypto market, the official emphasized the importance of implementing measures to ensure appropriate and protective taxation of cryptocurrency activity. The initial proposal to tax crypto trading earnings was submitted in January 2021.

According to the proposed legislation, crypto investors earning over 2.5 million won (roughly $1,900) each year will pay a 20% tax levy. Notably, this barrier sharply contrasts the stock market, where only gains surpassing 50 million won (roughly $37,400) are taxed. The party’s approach aims to remove regulatory gaps and promote a more thoughtful approach to crypto taxes.

Previous Delays

Due to several challenges, the roll-out of cryptocurrency tax gains has taken longer than expected. The tax proposal, which was supposed to go into effect in 2022, was postponed until 2023 when lawmakers discovered flaws in the National Tax Service’s proposed information-gathering procedures.

Legislators agreed to extend the tax implementation period emphasizing the need for a more complete and robust strategy. In July 2022, authorities announced a 2-year postponement and proposed a 20% cryptocurrency gains tax.

The authorities cited several factors that drove the decision. However, the most notable factor was the significant downtrend in the broader digital currency market. Bitcoin (BTC) was trading around $20,000 at one point before dropping to around $16,000.

Another factor cited by the government was market dynamics, emphasizing the importance of market stability before imposing tax changes. These moves show the government’s commitment to creating a regulatory framework that addresses tax issues and safeguards investor interest.

Steve Kornacki

Steve Kornacki

Steve Kornacki, a respected author at Big Trends Signals, uses his deep online trading acumen to create comprehensive guides and balanced reviews, empowering traders in their digital pursuits.

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