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Crypto taxation: South Korea lawmakers seek extension and tax rate adjustment

TL;DR Breakdown:

  • The People Power Party of South Korea is proposing a further delay and adjustment of the planned tax rate on crypto profits.
  • The Finance Minister had said it’s difficult to delay taxation on crypto, despite the opposing bills.

Hong Nam-ki, the South Korean Deputy Prime Minister and Finance Minister, is unflinching about the current plan of taxing cryptocurrency gains in the coming year. While crypto this seems inevitable, lawmakers in the country are instead seeking a further delay on crypto taxation, at least until 2023.

Lawmakers challenge crypto taxation in 2022

According to the report by The Korea Herald, the opposition People Power Party has drafted a bill, due to be submitted this Tuesday, on further prolongation of crypto taxation in South Korea to 2023. While speaking on this, Rep. Cho Myoung-hee of the People Power Party argued that “It is not right to impose taxes first at a time when the legal definition of virtual currency is ambiguous.”

In addition, the People Power Party is seeking to ease down the proposed capital gain tax on cryptocurrencies. South Korean government plans to impose about 20% capital gain tax on crypto profits of over 2.5 million won ($2,093) starting January 2022. However, the lawmaker wants to revise this tax rate to 20% for profit between 50-300 million won ($42,000-$251,000) and 25% for 300 million won.

“The intention is to ease the tax base to the level of financial investment income tax so that virtual currency investors do not suffer disadvantages,” said Myoung-hee.

Can the Finance Ministry agree to further delay?

In September, the ruling Democratic Party had also called for further delay on crypto taxation in the country on the ground that “relevant taxation infrastructure is not sufficiently developed.” However, it seems the Finance Ministry isn’t planning to slow down with the planned taxation in 2022.

During the parliament hearing last Wednesday, the finance minister argued that “it is difficult to delay taxation on virtual assets in terms of policy reliability and legal stability.”

Although the Finance Ministry is keen on taxing crypto in 2022, it’s possible this could still be delayed till 2023, as there are now more bills countering the crypto taxation plan next year. It’s also under the court of the legislative to decide well to start taxing crypto, said Noh Woong-rae from the ruling Democratic Party.

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