South Korea postpones 20% digital currency tax to 2023
South Korea will push its contentious 20% digital currency tax by one more year to 2023. The country’s National Assembly resolved to push the tax after months of fierce back and forth between the government and members of parliament.
As CoinGeek reported, the government has insisted in recent months that the tax will go on as planned starting January 2022. Initially, it was scheduled to start in October 2021 but after a case was made that the digital currency industry wasn’t prepared yet, it was pushed by another three months.
South Korea’s Finance Ministry has now announced that the National Assembly has passed a bill that pushed the tax. Once the bill receives approval on the plenary session of parliament, it will be officially slated for 2023. The ministry has been one of the main drivers of the tax. In September, Minister Hong Nam-ki told parliament that despite the opposition from the digital currency industry and some members of parliament, the tax would go on as scheduled in 2022.
The new tax rule imposes a 20% levy on digital currency profits above 2.5 million won ($2,100).
The Korea Blockchain Association was first to ask for a postponement of the tax, saying the industry and the tax agency weren’t prepared for its rollout. However, it was only when members of parliament from the Democratic Party stepped in that the government encountered its first major hurdle.
According to Reuters, members of the ruling Democratic Party and the opposition People Power Party in the Strategy and Finance Committee’s tax subcommittee united against the imposition of the tax in 2022.
The tax is greatly controversial. For one, it mirrors the capital gains tax imposed on stocks. However, for stocks, the tax starts at 50 million won ($42,000), 20 times higher than for digital currencies. This didn’t sit well with many in the industry who believe the sector is being unfairly targeted. The capital gains tax on stocks is also set to be imposed starting in 2023.
Despite the controversy, 55% of Koreans are in support of taxation, with just a third being outrightly opposed to it.
Speaking to Bloomberg, KryptoSeoul founder Erica Kang summed it up, “The crypto industry is not entirely against the taxation, as it can ease speculative bubble and volatility in the long term if it’s done right.”
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Author: Steve Kaaru