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Thursday, April 18, 2024

South Korea Reportedly Pushes for 2-Year Postponement on Crypto Taxation

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South Korea’s ruling People Power Party is reportedly advocating for a further two-year taxation postponement on cryptocurrency investment gains, which appears to be part of the party’s campaign for the general election coming in April.

Notably, the program was scheduled earlier for 2023 and rescheduled to January 2025, and the current People Power Party request is looking to push it to 2027.

People Power Party Wants Extension on Tax Policy

According to a report by Herald Business Daily, the People Power Party has emphasized that the government’s tax policy safeguards the public’s assets and well-being. A political leader from the party also highlighted the risks of implementing taxation without having a solid tax base.

Regarding the decision to postpone, he noted that there is no regulatory framework in place that is similar to stock exchanges, and there are instances where proof of income is handed to virtual asset companies. Further, the postponement, he says, is part of the party’s election pledge targeting 2030. He believes that at least two years will allow the necessary amendments to be passed and establish a robust regulatory system.

The new crypto regulations in South Korea are set to include crypto custody providers and guidelines for token listings. These regulatory measures will add to South Korea’s initial set of crypto regulations, which will take effect in July 2024.

Meanwhile, the party is looking to finish its core election promises by the end of the month.

South Korea Considers Crypto Tax Reform

Last month, a Ministry of Economy and Finance representative hinted at the possibility of discussions within South Korea’s legislative body regarding the abolition of income tax on cryptocurrency assets. The discussion aligns with the administration’s broader initiative to eliminate taxes on various financial investments, including stocks and funds.

However, the People Power Party is not considering completely abolishing cryptocurrency taxation. Instead, the party proposes harmonizing the crypto tax threshold with that of stocks, advocating for a more equitable tax framework. A 22% tax is imposed on crypto gains exceeding 2.5 million Korean won ($1,875), while stock gains are only taxed beyond 50 million won.

In December 2023, South Korea announced a policy mandating high-ranking public officials to disclose their cryptocurrency holdings beginning the following year. This policy aims to mitigate potential conflicts of interest and uphold ethical standards among government officials.

Furthermore, South Korea’s financial oversight head, Lee Bok-hyun, intends to discuss the cryptocurrency industry with U.S. SEC Chairman Gary Gensler, specifically focusing on spot Bitcoin ETFs.

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