South Korean Ruling Party Pledges Two-Year Postponement of Cryptocurrency Tax Amid Impending Elections

The ruling party of South Korea, the People Power Party, is promising to postpone the imposition of taxes on crypto gains for another two years, aligning with its campaign promises ahead of the upcoming general election in April.

According to reports from local media outlet the Herald Business Daily, the party emphasised the necessity of establishing a comprehensive framework for cryptocurrency before implementing taxation. They argue that taxation should only follow after such a framework is in place.

A party representative emphasised the absence of a solid tax base, highlighting the lack of oversight entities for crypto transactions compared to traditional stock exchanges. The party suggests that a two-year timeframe is required to establish this system. Additionally, they stressed that any taxation measures should safeguard citizens’ property and lives, suggesting a historical neglect of the crypto market by certain governmental bodies.

The proposal to tax profits from crypto trading was initially introduced in January 2021, intending to levy a 20% tax on gains exceeding 2.5 million won (approximately $1,900) annually, a threshold much lower than that for stock gains.

However, the implementation of this tax has faced multiple delays. Initially planned for 2022, it was pushed back to 2023 due to concerns about flaws in data collection procedures by the National Tax Service. Subsequently, in July 2022, the tax implementation was deferred by another two years, citing sluggish market conditions in the crypto space and the need for additional time to formulate investor protection measures, particularly during a period when Bitcoin’s value fluctuated between $16,000 and $20,000.