The People Power Party, the ruling party in South Korea, has initiated efforts to postpone the implementation of cryptocurrency gains tax for an additional two years as a campaign pledge in preparation for the April general election.
According to the Herald Business Daily, a local news source, the political organization stated that before delving into taxation, it is essential to establish a general framework for cryptocurrencies. The party believes that the feasibility of taxation cryptocurrencies should be contingent upon establishing this foundational framework.
A party representative further emphasized that the establishment of the tax base has yet to take place. In contrast to stock exchanges, no legally mandated entities are responsible for overseeing cryptocurrency transactions, according to the official. The party argued that establishing such a system would require two years.
In addition to asserting that taxation ought to safeguard national property and lives, the representative of the governing party noted that certain facets of the government have thus far “neglected” the cryptocurrency market.
The announcement regarding the intention to tax profits from cryptocurrency transactions occurred in January 2021. Constraints regarding taxation would impose a 20% tax on cryptocurrency investors whose annual gains surpass 2.5 million won (approximately $1,900). Compared to equities, where gains over 50 million won (roughly $37,400) are subject to taxation, the established threshold is considerably lower.
Throughout the years, the implementation of the tax has encountered numerous delays. The initial intention was to enforce the tax in the year 2022. Nevertheless, legislators reached a consensus to postpone the enforcement of the tax until 2023, attributing this postponement to deficiencies in the data collection processes that the National Tax Service (NTS) envisaged undertaking.
The 20% cryptocurrency gains tax implementation was once more delayed by two years, government officials announced in July 2022. The legislators, this time, cited the stagnant market conditions in the cryptocurrency industry.
Bitcoin (BTC) was trading for approximately $20,000 then and dropped to $16,000 afterward. Additionally, the government stated that it required time to develop investor protection measures.
