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South Korean Ruling Party Delays Crypto Tax Amid Elections

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South Korean Ruling Party Delays Crypto Tax Amid Elections

The People Power Party, the ruling party in South Korea, is pushing for a two-year delay in implementing the crypto gains tax as part of their campaign promises for the upcoming general election in April. The party believes that before imposing taxes on cryptocurrency, it is essential to establish a general framework for regulating crypto. They argue that the tax should only be implemented once this framework is in place. According to a representative from the party, there is currently no established tax base for crypto, unlike the stock exchange, where entities oversee transactions. The party suggests that it will take two years to establish such a system.

The ruling party also emphasizes that taxation should aim to protect the property and lives of the country’s citizens. They claim that certain aspects of the government have neglected the crypto market thus far. The plan to tax crypto trading profits was initially announced in January 2021. Under the proposed rules, investors who earn gains exceeding 2.5 million won (approximately $1,900) in a year would be subject to a 20% tax. This threshold is significantly lower than the one for stocks, which only taxes gains over 50 million won (around $37,400).

The implementation of the crypto gains tax has faced numerous delays. Initially, it was set to be implemented in 2022, but lawmakers agreed to postpone it to 2023, citing flaws in the information-gathering procedures by the National Tax Service (NTS). In July 2022, the tax implementation was delayed again by two years due to stagnant market conditions in the crypto space. The government also stated that it needed more time to prepare measures to protect investors. During this time, the price of Bitcoin (BTC) was around $20,000, dropping to a low of $16,000.

The People Power Party’s push to delay the crypto gains tax is part of their broader agenda for the upcoming general election. They believe that establishing a solid regulatory framework for crypto is essential before imposing taxes. The party argues that the lack of a designated authority overseeing crypto transactions makes it necessary to take the next two years to create such a system. They also emphasize that any taxation measures should prioritize the protection of citizens’ assets and lives. The proposed tax, which imposes a 20% tax on gains exceeding 2.5 million won, has faced multiple delays due to concerns about information gathering and market conditions.

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