South Korean planning and financial committee is planning to delay the crypto income tax rule. Korean lawmakers have earlier planned to implement the rule by October 2021. However, the commencement is now postponed to January 2022.
The Korean lawmakers took the step to help the crypto exchanges across the country. Korean crypto exchanges require time to build a proper and effective taxation infrastructure. Therefore, the commencement is now delayed to 2022.
Korean Lawmakers Believes Crypto Exchanges Are Not Ready
The amendments in the tax rules were introduced by the Korean Ministry of Economy and Finance by the starting of 2020. It was meant to charge a portion of income tax on every individual for the crypto gains. According to the official statement, the South Korean residents need to pay 20% income tax on the crypto gains, if it is more than $2,000.
There is now a proposal from the Korean lawmakers to postpone the tax rule by three months. This will give them some time to implement the changes as they also need to implement another act by the next year. The Korean crypto exchanges are required to enforce the ‘Special Financial Information Act’ and it has to be done in 2021 only.
Special Financial Information Act
A lot is going on with the Korean crypto exchanges and they need more time to figure everything out. The exchanges are required to complete the reporting system under the Special Financial Information Act by September 2021. In this, they are required to complete the KYC of all of its clients that will show the verified account names.
Now, this proposal of Korean lawmakers to postpone the crypto income tax rule’s implementation will help them to a great extent, if passed. This new financial information act will also help the exchanges to prevent cases like money laundering. The Financial Services Commission (FSC) of the country has banned several digital currencies that were having the risk of money laundering.