South Korea: Crypto Tax Law Might Be Postponed Until 2022
South Korea’s National Assembly may grant a three-month extension for the enactment of its planned crypto tax policy following consultations with industry stakeholders. Several commentators within the country’s cryptocurrency space still argue that levying taxes on virtual currency trading gains will likely stifle the growth of crypto commerce in the country.
South Korea’s Crypto Tax Law Likely Pushed to 2022
According to a report by South Korean media outlet dongA.com on Wednesday (Nov. 25, 2020), lawmakers in the country are considering an extension to the enactment of the country’s crypto tax regime. The move comes following requests by local exchanges for more time to build the necessary crypto taxation systems on their platforms.
As previously reported by BTCManager, South Korea’s Finance Ministry already finalized plans to levy a 20% tax on crypto trading profits that exceed $2,000. At the time, the news marked an end to months of speculation as to whether the government was moving ahead with a crypto tax regime.
Prior to Wednesday’s news of a possible delay, South Korea’s crypto tax law was scheduled to come into effect in Oct. 2021. Commenting on the planned extension, a member of the Tax Subcommittee in the country’s National Assembly, Rep. Lee Dong-min remarked:
“We must fully listen to [the] industry’s infrastructure and preparations. I feel that young people can react sensitively. It is good to implement it [the crypto tax law] quickly, but it is necessary to settle the system calmly while securing a considerable degree of consensus.”
South Korea’s tax regime is not without its critics as some sections of the industry say the move will negatively affect the growth of the crypto industry in the country. Indeed, crypto commerce in South Korea has dwindled significantly over the last two years as stringent policies have forced several participants to exit the country. Back in December 2019, the National Tax Service (NTS) slammed crypto exchange giant Bithumb with a $69.3 million tax fine.
Crypto taxation continues to be a contentious issue in jurisdictions where paying cryptocurrency taxes is mandated by law. Some critics say authorities should introduce a “de minimis” exemption for crypto tax payments below a certain threshold as a way of reducing the reporting burden on traders and exchanges alike.
In the US, tax authorities have even admitted that some crypto tax laws were far from ideal. Nevertheless, tax agencies like the US Internal Revenue Service (IRS) continue to pursue strict adherence to cryptocurrency taxation laws.