A recent report revealed that the South Korean government is considering delaying the taxation of cryptocurrency gains for the third time. Apparently, investors in the country are growing increasingly concerned due to a lack of system and “market confusion.”
Cryptocurrency taxation could be delayed by three more years
A local media reported South Korean lawmakers have proposed to further delay the implementation of cryptocurrency taxation in the country. The government had originally proposed implementing a 20% tax on cryptocurrency gains by January 2022.
The new rule has been postponed twice, with the latest postponement setting the implementation date for January 2025. If passed, the new law, propose by South Korea’s ruling party would push back the date of the cryptocurrency tax to 2028, a six-year delay from the original date.
Taxation of cryptocurrency profits was scheduled to begin in October 2021 after the National Assembly passed the corresponding tax law under the Moon Jae-in administration. Given the timing of the presidential elections the following year, the implementation date was postponed once to January 2023 and then to January 2025 under the Yoon Seok-yeol administration.
The main reasons cited for the delays are “concerns about the burden on cryptocurrency investors and market confusion.” Investors have reportedly expressed concerns about the lack of clarity, and complaints about the tax law have increased as the market has retreated.
According to the report, the recent cryptocurrency trading volume has declined significantly since the first quarter of 2024. The daily trading volume in March was around 20 trillion won, worth $14.5 billion. This figure has since dropped to 2 trillion won.
Industry officials fear that daily turnover figures could fall further if the tax on cryptocurrency Profits will start early next year. Many believe that with the tax law, “most investors will leave and trading will continue to decline.”
South Korea’s National Assembly website acknowledges negative sentiment. Source: South Korea’s National Assembly.
New postponement could ‘cancel’ tax law
Nearly 6.5 million people have invested in cryptocurrencies in South Korea by the end of 2023. According to the Financial Services Commission, more than half of domestic investors are people aged 30 to 40.
According to the report, politicians care about crypto investors because people in this age group also make up half of the country’s population. “Politicians are aware of the importance of public opinion,” the report reads.
Some Koreans, however, have criticized the government’s decision to delay the implementation of the tax policy. Many apparently consider the country’s tax policy to be “too influenced by the public opinion of taxpayers.”
Some officers have refuted the claim that there is still a lack of system and maintaining the system for proper tax regulation of cryptocurrencies. Critics oppose the new delay, pointing out that the government has postponed the tax law twice and had three years to prepare for it:
The government is not doing the right thing by claiming “lack of preparation” to delay paying taxes yet again. That means you haven’t done it.
Many fear that postponing the crypto tax a third time could nullify the law, noting that the arguments for its postponement, including the upcoming elections, could be used again with the 2028 elections.
The Ministry of Strategy and Finance revealed “No decision has been made regarding a further postponement of the taxation of virtual assets.” The decision will be announced by the end of the month.
Bitcoin (BTC) is trading at $62,770 in the weekly chart. Source: BTCUSDT on TradingView
Featured image from Unsplash.com, chart from TradingView.com
