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The proposal is in line with new President Yoon Suk-yeol’s view that taxation on crypto earnings should come after the market infrastructure is in place.
In a tax reform introduced on Thursday, the South Korean government proposed to postpone the planned 20% tax on crypto earnings for two years. If accepted, crypto earnings in South Korea will be taxed from 2025.
While the taxation plan for the digital asset was planned to be from January 2022, it was delayed for a year due to the great reaction from investors.
The Finance Ministry is planning to submit the bill related to the tax reforms in the National Assembly before September 2, media reports said.
Market Infra Before Taxation
The South Korean government is working on the digital asset basic law, according to estimates, this plan, which will come into effect in 2024, is specified in the government’s newly announced roadmap.
It is also thought that the digital asset fundamental law will regulate ICOs and cryptocurrencies.
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Before the election, Yoon Suk-yeol had said that crypto earnings should be taxed only after preparing proper market infrastructure for the digital asset sector.
Tax Threshold Unchanged
However, despite President Yoon Suk-yeol’s pro-crypto stance, his promise before the election that his government will increase the threshold for capital gains tax on crypto earnings from $2,000 to $40,000 has not been incorporated into the current tax reform.
The minimum taxable earning from crypto activities remains unchanged at KRW 2.5 million (US$1,900) in a financial year.
Forward-Looking Tax Laws
The deferment of the planned tax for the crypto sector is part of the broader tax reform marked by tax cuts to boost corporate investments.
“The government plans to help companies actively expand investment and create jobs…. If the tax cut boosts economic vitality, this will prop up the economic growth and boost tax revenue in the long term. Then, we could achieve the goal of enhancing fiscal soundness,” Finance Minister Choo Kyung-ho told a press briefing on Monday.