By crypto.news | Created at 2024-11-20 14:29:25 | Updated at 2024-11-22 08:56:10
1 day ago
The Democratic Party of Korea has confirmed its intention to introduce a 20% cryptocurrency taxation starting in Jan. 2025.
The new framework will impose a 20% tax with an extra 2% local tax levied on crypto profits exceeding the 50 million Korean won ($35,919) mark. The tax on profits from cryptocurrency was initially introduced in Oct. 2021 during the tenure of former President Moon Jae-in. Originally set for 2022, the implementation was delayed twice in response to pushback from investors. The revised exemption limit represents a significant increase from the former threshold of $1,795, which was approved by South Korea’s National Assembly.
The updated framework will make sure that the majority of retail investors remain unaffected by the new tax rule. Furthermore, the proposal will allow taxpayers more flexibility as they can claim up to 50% of the total sale price as the acquisition cost in case investors don’t have accurate records. These updates were implemented to help stabilize the market and ease any investor worries.
South Korea has no capital gains taxes on crypto.
Also foreigners can get a 19% flat tax rate for income tax (ends up more like 20.9% after resident tax).
That said, it is impossible for foreigners to sell crypto for fiat on Korean exchanges unless they create a company.
Last year, the administration’s policy was set to be implemented last Jan. 2023. However, the then-President Yoon Suk Yeol’s government pushed it back to 2025 amid threats that the introduction of the tax would overwhelm investors and cripple the market.
Later in June, South Korean officials from the Ministry of Economy and Finance proposed that the nation’s legislative assembly should consider stopping an income tax wholly on crypto gains altogether, according to CNN. The proposal is one element forming part of the government’s move to wholly abolish the upcoming tax on financial investments, which includes both stocks and funds.
Key legislative votes are coming up in November, with the Tax Subcommittee of the Strategy and Finance Committee scheduled to review the proposal on Nov. 25. It will be followed by a plenary session vote, anticipated on Nov. 26. The Democratic Party of Korea is working to finalize the framework ahead of its planned rollout. For now, South Korea is striking a balance between protecting its investors and regulating their market.
