In a strategic decision ahead of the upcoming general elections, the ruling People Power Party (PPP) in South Korea has announced plans to push for a further two-year delay in the implementation of cryptocurrency taxation. This move, reported by local media on February 19, was revealed as a key campaign promise during a press conference held by party officials.
The proposal to delay the commencement of taxation until January 2025 is in alignment with the government and legislative consensus to prioritize regulatory groundwork before enforcing taxes on virtual assets. The PPP argues that a strong regulatory system needs to be established before taxation can be effectively carried out.
Party officials highlighted the importance of establishing a solid taxation foundation for cryptocurrencies. The lack of a comprehensive regulated trading platform and challenges in income verification with crypto companies were cited as significant obstacles in collecting tax on virtual assets. Therefore, the proposal aims to delay taxation by at least two years to ensure the presence of a comprehensive system.
The PPP plans to propose the second phase of the “Cryptocurrency User Protection Law” in the upcoming 22nd National Assembly to address gaps identified in the initial phase of the law passed in June 2023. The new legislation will focus on defining custodial service providers, legally incorporating listing systems, and regulating crypto exchanges to establish a comprehensive regulatory framework for the virtual asset market.
While the party maintains that completely abolishing crypto taxation is not under consideration, they are exploring adjustments to the taxation criteria to address criticisms of tax disparity between stocks and virtual assets. The proposal aims to harmonize the tax treatment of different asset growth strategies and acknowledge the challenges in tracking investment amounts and returns for taxation purposes.
The party’s leadership emphasized the importance of finalizing central electoral promises by February to make a timely announcement, signaling a swift move towards formalizing this stance as part of their election campaign strategy. Under the current law, income from the transfer or lending of virtual assets exceeding KRW 2.5 million is subject to a 22% tax, including local taxes, contrasting with the KRW 50 million non-taxable limit for stocks.
Through a careful analysis of the information provided, it is evident that the People Power Party in South Korea is taking a strategic approach to cryptocurrency taxation. By prioritizing regulatory groundwork and proposing a delay in the implementation of taxation, the party aims to establish a comprehensive system that can effectively regulate and tax virtual assets. The upcoming legislative proposal for the “Cryptocurrency User Protection Law” indicates a commitment to addressing gaps in the current regulatory framework and ensuring investor protection in the cryptocurrency market. Adjustments to the taxation criteria further demonstrate the party’s willingness to adapt to criticisms and harmonize the tax treatment of different asset classes.Overall, the PPP’s election campaign strategy highlights the importance of addressing cryptocurrency taxation issues and regulatory concerns in South Korea’s evolving financial landscape.