South Korea crypto tax halted to protect consumers
South Korea crypto tax, which was meant to become effective for the 2022 fiscal year, but was delayed to 2023, has again been halted, this time by the president himself.
South Korea’s newly elected president Yoon Suk-yeol said he would back up the decision on deferring taxation on digital investment gains until the government enacts a new set of regulations called the Digital Asset Basic Act (DABA).
DABA was created by the Financial Services Commission (FSC) earlier this year and consists of numerous legislations introduced for consumer protection.
DABA applies to the token distribution, nonfungible tokens (NFTs), centralised exchange (CEX) listings, and international finance as a whole. It also acts as a response to U.S. President Joe Biden’s executive order on digital assets.
Postponed Until 2025
Be it as it may, a 20% tax on cryptocurrency profit, previously scheduled for January 1, 2023, is now postponed to 2025.
An FSC representative commented that “taxation of investment income from virtual assets should be done after investor protections are in place.”
Suk-yeol asserted it would be frivolous to enforce taxation without a clear legal definition of cryptocurrencies’ status within the country’s financial system.
“As such, it would be better to postpone the tax until the crypto market had matured and new legislation was readied thoroughly to ensure transparency and investor protection,” he said.
The yet-to-be-confirmed nominee for deputy prime minister and finance minister, Choo Kyung-ho, added taxing crypto in 2025 seems like a much more acceptable solution.
Last year, South Korea warned that defining crypto taxation laws was imminent and the country’s finance minister Hong Nam-ki then said the government plans to impose taxes on gains from the trading of virtual assets.
The thing is, for now, crypto taxation in South Korea seems to be stuck into a so-called grey legislation area: since cryptocurrencies aren’t considered currency or financial assets. For now, cryptocurrency transactions are tax-free.
Author: Teuta Franjkovic
A sincere writer with a strong will to share knowledge on all things blockchain, crypto, metaverse and DeFi. Starting out as a writer with Cosmopolitan, Teuta has risen through the ranks of business journalism, editing newspapers and websites within the fintech industry for over 15 years. She holds a double MA in Public Politics and Entrepreneurship.