The Democratic Party of Korea agreed to postpone the 20% tax on cryptocurrency profits until 2027, following a proposal for delay from the ruling party.
South Korea continues to delay the implementation of capital gains tax on cryptocurrency, initially set to take effect in 2025, after the Democratic Party of Korea (KDP) unexpectedly agreed to the 2-year delay proposal from the People Power Party (PPP), the ruling party of the country.
An official announcement was made on December 1 by KDP leader Park Chan-dae, confirming this consensus. This means that the legal framework for taxing profits from cryptocurrency transactions will be postponed to 2027.
Previously, the South Korean government proposed a 2-year postponement, while the PPP, fulfilling its campaign promise, proposed a 3-year extension, until 2028. The consensus reached between the two parties marks an important turning point, especially as the KDP had previously strongly opposed the PPP's delay proposal.
The sudden change of stance by the Democratic Party
On November 20, the KDP criticized the PPP's tax delay plan, claiming it was a 'political stunt' for upcoming elections. At that time, the Democratic Party insisted it would continue with the tax implementation plan for 2025. Instead of delaying, the KDP proposed raising the tax exemption threshold from $1,800 to $36,000, arguing that this tax would only affect large investors. However, with the latest statement, the KDP changed its stance, accepting the PPP's 2-year delay proposal.
The delay in the implementation of taxes on profits from cryptocurrency in South Korea has occurred multiple times. Initially, the plan was scheduled to be implemented in 2021, but was later postponed to 2023, and then to 2025 due to opposition from the cryptocurrency investment community. The main reason for the delay has always revolved around concerns about the negative impact on the market and investor interests. The PPP believes that early taxation is unreasonable and could lead to investors withdrawing from the market.
When the policy is implemented, cryptocurrency investors in South Korea will have to pay a 20% tax on profits from digital assets.