According to the country’s finance ministry, South Korea’s National Assembly passed a bill delaying the intended tax on crypto capital gains until 2023.
On November 29, representatives from the administration and the opposition in the National Assembly’s Tax Subcommittee reached an agreement.
The next phase is planned to take place on December 2 during the plenary session. If the amendment succeeds during the session, the proposed taxing scheme will take effect on January 1, 2023, a year later than planned.
Any annual gains of more than 2.5 million won will be subject to a 20% capital gains tax at that time.
Views on politics
While crypto gains will still be taxed in the future, deferring the possibility for another year was a bipartisan decision.
Democratic lawmakers, for example, have been lobbying for this delay, noting problems in the National Tax Service’s projected information-gathering systems. Last month, though, the law was introduced by the opposition People Power Party.
“It is intolerable to begin with taxes at a time when the legal definition of virtual money is unclear,” People Power Party Representative Cho Myoung-hee stated.
Representative Kim Young-jin, Chairman of the Tax Subcommittee, expressed a similar viewpoint, saying that the government has yet to create an official definition of what a cryptocurrency or virtual asset is.
“In our system, there is an uneven way of charging taxes with no clear basis on how to legally define cryptocurrencies… but taxation comes before regulation only in Korea,” he stated.
A fair tax system
On behalf of their voters, both parties were concerned about justice. One component of the bill, for example, imposes a 20% tax rate on profits between 50 and 300 million won ($42,000-$251,000), which is more generous than had been envisaged.
“The goal is to bring the tax base down to the level of financial investment income tax so that virtual currency investors are not penalized,” one representative explained.
Finance Minister Hong Nam-ki, on the other hand, wants the tax system to be fair so that individuals who profit from bitcoin trading contribute their fair amount.
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