South Korean lawmakers are considering abolishing a new crypto tax law that was set to come into force in January 2025. The National Assembly Legislative Research Service mentioned the possibility of a debate on abolishing the tax in the latest edition of the National Assembly Legislative Policy Guidebook. Lawmakers are facing pressure to delay or cancel the tax, as some argue that it would discriminate against investors in other assets like stocks and gold. The tax, which was first voted into law at the beginning of the decade, has faced opposition and delays since its inception.
The tax on virtual assets was initially scheduled to come into force in January 2022 but was delayed by a year in late 2021. Subsequent delays pushed the implementation date to 2025, with President Yoon Suk-yeol’s People’s Power Party promising further delays if they performed well in the legislative elections. Despite the party’s defeat in April, politicians are now under pressure to reconsider the tax. Some lawmakers and officials have suggested that the tax should be abolished or postponed, with the possibility of including crypto on a list of tax-free financial investments.
The current tax law would require crypto traders to start logging their profits on January 1, 2025, and report and pay taxes on these profits by May of the following year. Domestic investment in South Korea has been sluggish for decades, with many investors preferring overseas investment and crypto trading. Crypto enthusiasts argue that the tax is unfair, with thresholds lower than those for domestic stock market traders. The administration of former President Moon Jae-in took a strict stance on taxing income, while Yoon’s administration aims to ease pressure on investors to stimulate growth.
The National Assembly is set to vote on proposals that could scrap the tax, with lawmakers debating whether to implement the virtual asset income taxation system in conjunction with discussions surrounding gold investment tax. Some believe that virtual assets are investment-focused assets like stocks and should be treated accordingly. Experts suggest that lawmakers will make a decision before the end of the current National Assembly session, which leaves just six months before the tax is set to come into effect. The push to delay or abolish the crypto tax reflects ongoing debates and tensions surrounding the regulation and taxation of digital assets in South Korea.
