South Korea’s main opposition party, the Democratic Party, has unveiled a bill that seeks to raise the crypto tax threshold.
According to Seoul Shinmun, the DP’s bill proposes launching crypto tax per the current schedule (January 2025), but raising the threshold to 50 million won (around $36,000).
S Korean Crypto Tax Threshold: Further Changes Ahead?
This would give crypto traders parity with stock market investors, who do not have to pay taxes on their trading income if it does not exceed a similar limit.
Under existing law, crypto traders will have to start paying tax on their annual earnings under the much lower threshold of 2.5 million won (just under $1,800).
The chamber of South Korea’s National Assembly building in Seoul. (Source: Dmthoth [CC BY-SA 3.0])
The party will reportedly present its bill to the National Assembly’s Planning and Finance Committee, which is set to convene on November 26.
Many party have voiced strong support for rival tax deferral plan as investors express “strong opposition.”
Instead, the DP, the media outlet wrote, has “chosen a compromise plan” that “will reduce the tax burden on professional and more general investors.”
The party has a large majority in the National Assembly. It has 170 seats and has links with the Rebuilding Korea Party, which has a further 12 seats.
The ruling People’s Power Party (PPP), meanwhile, has 108 seats. This has led to a period of so-called “lame duck” presidency following elections held in April this year.
Crypto played a key role in the elections, with both the DP and the PPP attempting to woo younger voters with promises of delays in crypto tax launch, lower thresholds for crypto traders, and a possible Bitcoin spot ETF launch.
Seoul Shinmun added that the DP also plans to submit its proposal to the Tax Subcommittee of the National Assembly’s Strategy and Finance Committee on November 25.
If it clears both of these hurdles, the outlet claimed, the party hopes to pass its bill before the house at a plenary session on November 26.
The party will need to fast-track its bill before the end of the current parliamentary session.
Other Options Still in Play?
Media outlets had previously claimed that the DP was working with the PPP on plans to abolish existing investment tax rules and delay the launch of crypto tax to a later date.
The head of the PPP, meanwhile, this week spoke of his own desire to defer the launch of crypto tax.
Other proposals have seen lawmakers speak of delaying the launch until as late as January 1, 2028.
However, the DP has seemingly chosen a fast-fix “compromise” option instead.
The issue of crypto tax in South Korea is a political football that has been in play since 2019, when lawmakers first began discussing it in earnest.
MPs first voted to launch the tax in 2020. The relevant Income Tax Act amendment was originally slated to take effect on January 1, 2022.
But MPs have since voted to delay it twice. Lawmakers have engaged in renewed talk of a delay throughout 2024.
Manifesto Pledge
The DP and the PPP have both used pledges of further delays in manifestos for general and midterm elections.
An unnamed DP policy spokesperson said:
“Most investors, except for a very small number of large-scale investors, will not end up being subject to taxation [under our proposal].”
The DP will reportedly try to reach an agreement with the PPP. But is allegedly ready to ditch its bill if the government rejects it.
The PPP’s floor leader Choo Kyung-ho claimed that his party’s “position” was that a delay was preferable to a crypto tax threshold amendment.
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