South Korea’s ruling Democratic Party of Korea (DPK) is moving forward with plans to implement cryptocurrency taxation from January 2025, marking an end to previous delays.
Originally set for January 2022, the 20% tax on crypto gains (22% including local taxes) faced heavy opposition from investors and industry experts, prompting two postponements.
Recent discussions included proposals for further delays, with one suggesting a start as late as 2028.
DPK to Enforce Tax in 2025
However, the DPK has reaffirmed its commitment to enforcing the tax in 2025, the Seoul Shinmun reported.
To address concerns, the party has introduced amendments to the tax plan, notably increasing the exemption threshold from 2.5 million won ($1,795) to 50 million won ($35,919) in annual cryptocurrency gains.
The amendment also accounts for the unique challenges of the crypto market.
Taxpayers lacking precise purchase records would be allowed to calculate taxes using a percentage of the sale price as a proxy for acquisition costs.
The DPK clarified that raising the tax exemption limit significantly reduces the number of affected investors.
According to the Seoul Shinmun, the party acknowledged that with the higher threshold, only a few would exceed the taxable amount, making the impact of the policy minimal.
The revised plan is expected to be voted on by the National Assembly’s tax subcommittee on November 25, followed by a general legislative session on November 26.
Just recently, the South Korean city of Paju said it has warned 17 residents to pay their taxes or it will forcibly liquidate their crypto holdings.
The city said the residents have until the end of November to pay outstanding local tax bills.
Local South Korean governments have spent the past few years cracking down on tax offenders who seek to use crypto to conceal their income and assets.
But in recent months, they have begun using more sophisticated software solutions to help them track down tax dodgers with crypto holdings.
South Korean law also permits them to order crypto exchanges to hand over their clients’ wallet details.
In June, officials in the Jeonbuk (North Jeolla) Special Self-Governing Province confiscated coins worth $138,000 from local tax dodgers.
South Koreans Turn to Crypto
A recent survey has revealed that most young South Koreans are losing faith in the national pension system, with many stating they see crypto and stocks as a better alternative.
The study found that more than three-quarters of people aged 20-39 “don’t trust” state-issued pensions.
Over half of respondents who said they were making their own pension plans claimed they were building their retirement funds with stocks and crypto.
Interestingly, even election candidates themselves have exposure to cryptocurrencies, with approximately 7% of them owning digital assets, according to a report by Yonhap that analyzed their asset disclosures.
Just recently, it was reported that South Korea is set to introduce stricter regulations for token listing on exchanges, including the blocking of tokens that have been hacked.
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