As published on cryptodaily.co.uk, Thursday 21 July, 2022.
The South Korean government’s plans to levy a 20% tax on all cryptocurrency earnings has been postponed until 2025. Regulations to protect investors are to be put in place first.
It was a rule which sparked much controversy in South Korea, when the government had initially announced a 20% crypto earnings tax that would come into effect in January of 2023.
However, it appears that the government has now delayed things, with president Yun Suk-yeol promising to work on regulations first. The tax is to be postponed until 2025 according to a South Korean public broadcast, available on YouTube.
The initial plan to impose a 20% tax levy on those who have crypto gains exceeding KRW 2.5 million ($1,900) in a one year period will remain unchanged.
According to Coindesk, a source has said that a reason for the 20% tax postponement could be that smaller crypto investors would be unfairly targeted, given that the threshold for capital gains in the traditional stock market is a lot higher.
It is the second time now that the South Korean government has delayed the crypto tax since it was first announced in January of 2021. It was deferred to 2023 after it was supposed to come into effect in 2022. Now it has been delayed two further years until 2025.
Given that Yun Suk-yeol is a newly-elected pro-crypto president, it is likely that he wants to make sure that regulation is solid before bringing in any new taxes.
Other countries where controversial crypto taxes were put in place have faced some serious problems. For example, Thailand proposed a 15% crypto gains tax, but an outcry from its crypto industry meant that the government had to scrap the idea.
The Indian government went a huge step further when it imposed a 30% tax on crypto starting in April this year. However, the harsh tax caused many to stop trading, and Indian crypto exchanges lost more than 90% of their trading volume within weeks of the new tax being implemented.