The ruling Democratic Party of South Korea has proposed a “Partial Amendment to the Income Tax Act” that could delay the country’s cryptocurrency taxation laws to 2023.
In the new proposed changes to the existing taxation laws in South Korea, the upcoming policy on digital assets would now be delayed to January 2023. Reportedly, the Democratic party of South Korea passed a bill that could suspend the crypto legislation which was supposed to go into effect next year.
Noh Woong-rae of the Democratic ruling Party believes that South Korea is not well-equipped to plan the crypto legislation and hence delaying the initiative was only “inevitable.”
“In a situation where the relevant taxation infrastructure is not sufficiently prepared, the deferral of taxation on virtual assets is no longer an option but an inevitable situation.”
Noh added that the upcoming crypto taxation wouldn’t have worked as planned as it’s almost impossible to secure and track transaction data in the case of overseas transactions and peer-to-peer (P2P) transactions.
Previously, the Ministry of Strategy and Finance passed the Income Tax Act which classified virtual assets as “other income”. With the new classification, the commission would be able to levy 20% on income over 2.5 million won ($2,262) per year.
While the new rules will most likely be applied in January 2023, crypto investors will become subjects of taxation from Jan. 1, 2022.
Legislation for the taxation of crypto gains has been postponed several times since it was first proposed last year.
In South Korea, if disagreement between the ruling and opposition parties appears, the bill will be delayed and discussed in the Korean unicameral parliament. Hence, the country’s National Assembly is expected to pass the amendment, provided the ruling and opposition parties agree.
“As the relevant laws for tax deferral and real tax cuts are currently pending in the standing committee, we will actively persuade fellow lawmakers so that they can be dealt with in the regular National Assembly.”