The Democratic Party of Korea is moving forward with a plan to impose a tax on cryptocurrency profits from early 2025 but is offering a solution by raising the threshold for taxable profits.
On November 20, local newspaper Seoul Shinmun Daily reported that the Democratic Party of Korea (KDP) has challenged the People Power Party’s (PPP) plan to delay cryptocurrency taxation until 2028.
The country’s ruling party, the PPP, proposed on July 12 that the taxation of cryptocurrency profits be postponed until 2028. However, the KDP said in the report that the PPP’s plan to postpone the cryptocurrency tax is a political ploy that they intend to use again in the upcoming elections.
Increased threshold from $1,800 to $36,000
For this reason, the KDP is pushing ahead with the implementation of the planned Cryptocurrency capital gains tax in 2025. According to the party, they are willing to agree to increase the threshold for taxable Cryptocurrency capital gains.
In the original tax plan, cryptocurrency investors were required to pay an annual cryptocurrency profit tax of 20% on profits over 2.5 million won (about $1,800). However, the plan received strong opposition from stakeholders and cryptocurrency investors.
So KDP has proposed a new plan to raise the threshold for profits exceeding 50 million won (about $36,000). This would be similar to the tax threshold for domestic stocks.
The KDP believes that expanding the taxable profits threshold is tantamount to eliminating the Cryptocurrency tax altogether. The party argues that there would be no tax implications as few investors have made profits exceeding $36,000 from their Cryptocurrency investments.
The party believes that with the new threshold, only big players will be affected by the Cryptocurrency profits tax in the country.
Cryptocurrency Tax Delayed in South Korea
Cryptocurrency capital gains tax in South Korea was originally scheduled to be implemented in 2021. However, opposition from cryptocurrency stakeholders and industry leaders has forced the South Korean government to postpone the implementation of the tax until 2023.
After politicians acknowledged investors' concerns, it was postponed again to January 1, 2025. If the KDP and the ruling party agree, the 20% capital gains tax could be implemented next year.
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