Digital currency holders in South Korea have been granted an extra three months before a new taxation rule is implemented. The rule was to be implemented in October 2021, but will now be delayed until January 2022.
South Korea finalized its digital currency tax proposal in July, with the Deputy Prime Minister Hong Nam-Ki revealing it would take effect in late 2021. The rule requires Koreans to pay a 20% on digital currency profits above KRW2.5 million ($2,259).
Soon after the government revealed the rule, several stakeholders in the digital currency industry were up in arms against it. Some felt that the industry was still too young to face such a huge tax cut. Yonsei University economist Sung Tae-yoon stated at the time:
“It is premature for the government to impose cryptocurrency taxes at a time when the market has not developed enough in a stable manner. Any rash taxation or introduction of regulations can be a stumbling block for sustainable growth of the industry.”
The Korea Blockchain Association soon after called on the government to delay the implementation for two years. According to the lobbying organization, the time period given to exchanges was too short. Oh Gap-soo, the association’s chairman remarked:
“It is necessary to provide a reasonable minimum period of preparation so that it can contribute to the national economy and to secure tax revenue in the long term.”
South Korean lawmakers have offered this reprieve to the digital currency industry, local outlet Dong-A Ilbo reports. The outlet reports that the lawmakers concurred the timeline wasn’t sufficient for the exchanges to adhere to the new rules. The tax sub-committee at the national assembly is expected to announce the specific implementation dates in the coming week.
Rep. Lee Dong-min of the ruling Democratic Party stated, “It’s good to implement it [the new tax rule] quickly, but it’s also critical allow the system to settle calmly while securing a considerable degree of consensus.”