South Korean lawmakers are struggling to reach a consensus on crypto tax policy as the deadline looms. The new legislation, set to take effect on January 1, 2025, mandates a tax on annual cryptocurrency profits exceeding 2.5 million KRW (approximately $1,800).
Disputes Over Proposed Tax Threshold
Crypto investors argue the tax is unfair, prompting action from lawmakers across the political spectrum. However, the ruling People’s Power Party (PPP) is at odds with the Democratic Party (DP), which has proposed raising the taxable profit threshold to 50 million KRW ($35,750). This change would align crypto taxation with stock market investment rules, which have a similar threshold.
Despite discussions in the National Assembly’s Tax Subcommittee, no agreement has been reached. One lawmaker noted that “nothing was decided,” with both parties agreeing to revisit the issue later.
Calls to Delay the Tax Implementation
While the DP pushes for its proposal, the PPP supports delaying the tax until 2027 or 2028. DP floor leader Jin Sung-joon has taken a firm stance, insisting the tax’s implementation is necessary for legal stability. He stated, “Crypto tax was voted into law four years ago. Its launch has been postponed twice since then.”
However, the DP itself appears divided. Party leader Lee Jae-myung has expressed doubts about the feasibility of meeting the January 2025 timeline. Despite this, the DP remains committed to advancing its proposal, fearing they may have to concede to the PPP’s delay plan.
Crypto Tax and Broader Political Tensions
The PPP leader Han Dong-hoon has expressed support for the tax but emphasized the need for a fair and well-prepared rollout. He accused the DP of “fighting 8 million South Korean crypto investors and young people” rather than engaging with the government and the PPP.
Crypto traders have voiced their concerns, claiming the tax lacks proper guidelines and unfairly targets domestic exchange users while ignoring transactions on overseas platforms. One trader remarked, “Many people trade on overseas exchanges, so it seems realistically impossible to tax them.”
Broader Legislative Challenges
The crypto tax debate is unfolding alongside budgetary disputes for 2025 and controversies involving First Lady Kim Keon-hee. Lawmakers face a December 2 deadline to finalize decisions on the budget and crypto taxation to prevent emergency measures.
This gridlock highlights the growing divide in South Korean politics, with significant implications for the nation’s economic and regulatory landscape.
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