South Korean legislators are contemplating the possibility of “abolishing” a recently passed crypto tax law, even before it is due to take effect in six months. The National Assembly Legislative Research Service has brought up the potential debate around the elimination of the crypto tax in the latest version of the National Assembly Legislative Policy Guidebook.
Lawmakers in South Korea are considering voting on proposals to eliminate a proposed tax on gold investments, with some arguing that this move would unfairly discriminate against investors in other assets such as stocks and cryptocurrencies. The guidebook highlights the perception that “virtual assets are investment-focused assets similar to stocks,” as these assets are bought and sold in a similar manner.
Previously, lawmakers had voted to delay the implementation of a flat-rate 20% tax on crypto-related income exceeding 2.5 million won (approximately $1,810) per year. The controversial crypto tax law was initially passed at the beginning of the decade and has faced resistance in the assembly ever since.
Despite the initial plan for the tax to take effect in January 2022, it was postponed by a year in late 2021. Subsequent delays led to an agreement to launch the tax in 2025. Following the defeat of President Yoon Suk-yeol’s People’s Power Party in April’s legislative elections, there is renewed pressure on politicians to reconsider the implementation of the tax.
In January, a senior official from the Ministry of Economy and Finance suggested that the National Assembly should discuss the possibility of removing the tax and consider exempting crypto from taxation altogether. As things stand, crypto traders would be required to track their profits starting from January 1, 2025, and report and pay taxes on these profits by May of the following year.
Crypto enthusiasts argue that there needs to be investment parity, as the current tax thresholds for crypto traders are much lower than those for domestic stock market traders. With only six months left until the tax is set to be implemented, experts predict that lawmakers will make a decision before the conclusion of the current National Assembly session.