South Korea to postpone Crypto Tax bill to 2027

South Korean regulators have agreed to postpone the 20% crypto tax for two years after rejecting the Democratic Party’s proposal to raise the annual tax threshold from 2.5 million won to 50 million won.

According to local media outlet Money Today, Democratic Party chairman Park Chan-dae announced at a press conference that the DP had accepted the government’s plan to postpone the tax on crypto traders for another two years, pushing back the bill planned for 2025. 2027.

Park said the government needs “more institutional preparation” before regulators can begin systematically taxing crypto traders.

“After in-depth discussions regarding the deferral of taxation on virtual assets, I thought it was time for additional institutional revision,” Park said.

The National Assembly will vote on December 2, 2024 to decide the fate of South Korea’s crypto tax proposal, with both parties agreeing to postpone the tax.

Initially, the DP opposed the People’s Power Party’s plans to delay the launch and insisted that the 20% tax on crypto traders should be introduced in January 2025. The DP also proposed raising the annual tax threshold from 2.5 million won ($1,781) to 50 million won ($35,633).

However, the government rejected the main opposition party’s proposal and instead voted in favor of the PPP’s proposal to postpone the crypto tax to 2027.

Additionally, Park said there is still room for negotiations on 13 bills proposed by the government, including the crypto tax law, inheritance law and gift tax law. This means that the 20% tax on crypto investors making a minimum profit of 2.5 million won may still change.

“If the government does not take any steps, an even bigger discount is possible with the revised plan.” [which modifies the current reduction plan]” said Park.

This marks the third time that the South Korean government has decided to postpone the virtual asset tax bill. It was first introduced in December 2020 and was planned to be implemented as early as 2021, but the bill was later postponed to 2025. Now there is a very strong chance that it will be postponed to 2027.

The law will impose a 20% tax, with an extra 2% local tax on profits exceeding 2.5 million won ($1,781).

Many major crypto exchanges opposed the 2.5 million won threshold and said that the 20% tax on the basic deduction would cause trading volumes to decline.