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Uncertainty persists: South Korean investors waiting for the future of crypto taxes. Indeed, the Democratic Party of South Korea has agreed to postpone the application of the tax on Cryptocurrency profits for another two years, thus reversing its previous position on the matter.
Initially scheduled for 2021, South Korea’s plan to tax cryptocurrency profits has suffered multiple postponements. Strong opposition from the industry, which argued that such a rapid implementation would harm investors, forced the government to delay the measure until 2023. However, given the persistence of the sector’s concerns, the government decided to postpone the tax again, this once until 2025.
Particularly, the Government and the People Power Party (PPP), the country’s ruling party, proposed grace periods of two and three years, respectively, for the implementation of the cryptocurrency tax. However, in an unexpected twist, the PPP upped the ante by requesting a deferral until 2028, arguing that accelerated implementation could generate distrust among investors and harm the market.
Incidentally, on November 20, the opposition party openly challenged the postponement plan, accusing the PPP of using this measure as a political strategy to win votes in future elections. Unlike the PPP, the KDP remained firm in its stance of implementing the tax in 2025.
New postponement of crypto tax in South Korea
Specifically, this announcement was made by Park Chan-dae, representative of the Korean Democratic Party (KDP), during a press conference held on December 1 at the National Assembly in Yeouido, Seoul. Park stated that after extensive discussions on the matter, it was deemed necessary to further reform the virtual asset tax system before proceeding with taxation.
In this regard, he said: “After in-depth discussions, we thought that the deferral of virtual assets was a time when additional maintenance of the system was necessary and we decided to accept a two-year deferral of taxes.”
However, regarding the specific details of the negotiations, he simply said: “I will have the opportunity to speak with you again later. “The decision was made after long deliberation, discussion and political judgment.”
Actually, if approved, it would be the third time that South Korea has postponed the 20% tax on cryptocurrency profits over 2.5 million Korean won ($1,781).
Finally, the law to tax cryptocurrency profits was due to come into force in January 2025, but this recent decision will delay its application until 2027.
I close with this phrase from José Cecilio del Valle: «The government that with one hand demands an increase in taxes. With the other, he must seek the increase of wealth.
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