After the South Korean government and the ruling party pushed to abolish the Financial Investment Income Tax (Financial Investment Tax), they are now actively promoting the delay of virtual asset taxation. The Democratic Party is considering raising the tax exemption threshold from the current 2.5 million won to 50 million won, a 20-fold increase. However, South Korean media reported that Democratic Party representative Lee Jae-myung expressed concerns about virtual asset taxation in a closed-door meeting, causing related discussions to fall into chaos once again. This situation may replay the controversy over the Financial Investment Tax.

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Financial Justice Alliance: Irresponsible policies undermine tax justice and political trust

Kim Deok-ik (phonetic), a representative of the Financial Justice Alliance, strongly criticized the government's tax delay policy, describing it as 'an irresponsible act that again undermines tax justice and political trust.' He pointed out that the government's and political circle's repeated decisions to delay taxation are damaging the fairness of the tax system.

Taxation controversy for small holders

According to data from the South Korean Financial Services Commission, 72.8% of virtual asset users hold assets of less than 1 million won (approximately $716), and based on the current exemption amount, the vast majority are no longer within the taxable range. Users holding more than 5 million won in assets account for only 15.4% of the total, and if limited to the 20 to 30 age group, this proportion drops to less than 10%. Such statistics raise questions about the effectiveness of tax policies.

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The third largest market in the world, yet the tax system remains incomplete

As of the first half of 2024, the number of virtual asset users in South Korea has reached 7.78 million, making the market scale the third largest in the world, after the United States and Japan. Currently, the price of Bitcoin is approaching the $100,000 mark. Civic groups criticize:

In such a large market, the absence of a complete taxation system is truly unbelievable.

They strongly condemn the government's repeated delays in taxation under the pretext of an inadequate tax system.

The delay has now entered its third year, while the international community has already implemented taxation systems.

The taxation of virtual assets in South Korea has been delayed for the third year. Meanwhile, major countries with larger market scales such as the United States, Japan, the United Kingdom, Germany, and Australia have already implemented virtual asset taxation systems. In light of this international trend, South Korea's repeated delays have been criticized as lagging behind global standards.

The exemption amount of 50 million won has sparked controversy over tax cuts for the wealthy

The chairman of the policy committee of the Democratic Party, Jeon Seong-jun (phonetic), stated that if the exemption amount is raised to 50 million won, only 0.03% of users with assets exceeding 1 billion won would have to pay taxes. However, Kim Deok-ik from the Financial Justice Alliance criticized: 'The claim to raise the exemption amount to 50 million won is not aimed at normalizing taxation, but rather finding an excuse to raise the exemption standard.' He believes this severely undermines tax justice. He further pointed out: 'The People Power Party's insistence on delaying taxation for the 0.03% who pay taxes is indeed irresponsible, while the Democratic Party, allowing only 0.03% of people to pay taxes, similarly deviates from tax justice.'

Call to strengthen the tax system and achieve tax justice

There has been an ongoing wave of criticism against the government's and ruling party's decision to delay virtual asset taxation. Experts and civic groups unanimously call for the rapid establishment of a tax system that matches the market scale, to achieve fair taxation and stop indefinite delays.

This article discusses how the South Korean government forcibly delayed virtual asset taxation, with criticisms from opposition party representatives and other groups: undermining tax justice. It first appeared in Chain News ABMedia.