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The South Korean government has delayed its crypto tax implementation to 2027, marking the third postponement since its initial proposal in 2021. The decision comes amid ongoing debates over market stability and concerns about investor outflows.
Crypto Tax Delay: KDP Agrees to Two-Year Postponement
In a U-turn, the Democratic Party of South Korea has agreed to postpone the implementation of the country's cryptocurrency capital gains tax for another two years, from 2025 to 2027.
South Korea's ruling People's Power Party (PPP) and the Korea Democratic Party (KDP) have proposed a capital gains tax on digital assets, but the KDP has agreed to delay its implementation for two years, according to a press conference held by Park Chan-dae, the KDP's floor leader, on December 1.
In January, the country's new law that taxes cryptocurrency earnings will go into force. Nonetheless, the latest news will hasten the tax's implementation until 2027.
Proposed Grace Period Sparks Political Debate
The PPP has advocated for a three-year crypto gains tax grace period, whereas the government had previously suggested a two-year one.
The governing party formally suggested postponing the implementation of the country's tax on income from cryptocurrency trading on July 12.
The PPP stated that it is "not advisable" to tax cryptocurrency quickly and that investors would pull out of the industry as a result. The party hoped to fulfill a campaign pledge by delaying implementation until 2028.
South Korea's ruling party and government saw their plans for a cryptocurrency tax met with fierce opposition from the KDP, which ultimately led to a retreat from enacting the levy.
KDP Proposes Higher Tax Thresholds for Big Players
Claiming that the PPP's tax deferral plan was nothing more than a political ploy to be used in future elections, the KDP contested the ruling party's plan on November 20. Alternatively, the Democratic Party has stated that it will proceed with its intention to tax cryptocurrency in 2025, Cointelegraph reports.
The KDP proposed raising the tax threshold from $1,800 to $36,000 rather than postponing the crypto tax. The group in question claimed that this would primarily impact major stakeholders.
South Korea’s Crypto Tax Postponements: A Timeline
The original target year for the implementation of South Korea's intention to tax cryptocurrency earnings was 2021. The government, however, was forced to postpone the tax's implementation until 2023 due to pushback from crypto players. Similar worries for investor interests led to its postponement until 2025.
Gains from digital assets will be subject to a 20% tax once the law is enacted in South Korea.
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