South Korean authorities have once again postponed the imposition of the crypto tax until 2025, mentioned in the official announcement. This new proposal aligns with the opinion of the new president Yoon Suk-yeol, who is of the opinion that crypto taxes are secondary.
The main task to be performed is to ensure that the market infrastructure is in place. Once the market infrastructure is in place, asset class taxation will be imposed. 20% capital gains tax on crypto It was initially expected to come into force in early 2023.
Following that decision, there have been various reasons for the delay in taxing digital assets. The tax plan has been delayed before. Now the new president has decided to defer taxation for another two years.
Once this reform is accepted, the crypto tax will come into effect in the year 2025. The 20% tax will be levied on crypto earnings exceeding $1,900 in a year. Market enthusiasts don’t entirely agree with the decision, feeling that taxes above the $1,900 threshold are a bit harsh. There are chances that small investors will be negatively affected by the same.
The reason for the crypto tax delay is attributed to volatile market conditions
South Korean officials have announced these new tax reforms recently, the main reason behind the reform is market volatility. For the taxes to be imposed, the market must be stable along with the time needed to prepare policies that will be aimed at protecting investors. The plan to impose the additional 20% tax on crypto profits over $1,900 (2.5 million won) remains unchanged.
Crypto taxes have been a priority for the government as the industry has made tremendous progress in recent years. Thailand had also proposed a tax on crypto profits of 15%, but had received criticism from retailers that forced the Thai authorities to remove that policy.
Financial regulators have been working to strengthen crypto regulation
South Korea’s financial regulation of cryptocurrencies has always been in the spotlight and now they are finding ways to strengthen it. In recent times, the authority has started to investigate currency transactions in commercial banks used for the illegal use of the digital asset.
South Korea is also concentrating on the “Digital Asset Basic Law,” which is a regulatory framework for the digital asset ecosystem in the country. This Law could be introduced in the year 2024. It should also be noted that the reform of the crypto tax regime is in line with the economic policy roadmap. It also mentions that the upcoming Digital Assets Basic Law should regulate ICOs and crypto listing.
In addition, this delay of the planned tax on industry is part of a broader tax reform that will help corporate investments.
Finance Minister Choo Kyung-ho has also mentioned,
The government plans to help companies actively expand investment and create jobs…. If the tax cut boosts economic vitality, this will boost economic growth and increase tax revenues in the long run. So, we could achieve the goal of improving fiscal soundness
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Featured image from OhFact, and chart from TradingView.com