South Korea Postpones 20% Crypto Tax Policy to 2022
South Korea has delayed the enforcement of its crypto tax law until the start of 2022 providing ample time for exchanges to create the necessary machinery for accurate cryptocurrency financial reporting. The news also finalizes the country’s tax plan after months of speculation concerning levying taxes on virtual currency trading gains.
South Korea’s Crypto Tax Coming in 2022
According to a report by Yonhap on Tuesday (Dec. 1, 2020), South Korea’s parliament has officially postponed the enactment of its crypto tax policy until 2022. Back in November, BTCManager reported that the National Assembly was considering a move to provide an extension to the cryptocurrency taxation policy.
The decision to postpone came after a session of the Planning and Finance Committee which held on Monday (Nov. 30). South Korea’s official tax policy will now come into force in January 2022; three months later than previously scheduled.
By delaying the enactment of the law, South Korean officials say the government is giving sufficient time for crypto exchanges to work out the necessary modalities required for complying with the new directive. When in force, crypto trading profits exceeding 2.5 million won (approx. $2,500) per year. This threshold provides a de minimis crypto tax exemption for gains below this mark.
South Korean exchanges will need to comply fully with real-name trading account regulations as part of the new crypto tax regime. Indeed, this law was part of the provisions included in the legislative action of March 2020 that effectively gave full legal status to crypto trading operations in the country.
Bithumb, as well as fellow “big four” competitors Corbit, Coinone, and Upbit, are the only cryptocurrency exchanges in South Korea currently in compliance with real-name trading accounts regulation. With the crypto tax policy coming in 2022, platforms still have sufficient time to attain full compliance with this regulation.
As previously reported by BTCManager, some critics of the crypto tax plan say levying taxes on cryptocurrency trading gains will stifle the growth of the industry. Indeed, South Korea’s virtual currency space has stagnated over the last two years on the back of successive stringent government regulations.
However, 2020 has seen the government take steps to provide some support for the crypto and blockchain industry. The country’s central bank is also planning to conduct trial runs for an experimental digital currency in 2021.