The South Korean government is considering whether to exempt cryptocurrency gains from income tax as part of its new tax reform plan. Jeong Jung-hoon, deputy minister of the tax and customs office for the Ministry of Economy and Finance, said on Wednesday that the National Assembly should debate whether to include crypto assets in the proposed abolition of income tax for financial investments, ZDNet reported.
The tax reform plan, announced on Wednesday, aims to stimulate economic activities, stabilize people’s livelihood, strengthen fiscal sustainability and tax fairness, and enhance taxpayer convenience. One of the key policies is to rescind the taxation on financial investments, such as stocks and funds, to encourage the accumulation of wealth and financial planning of citizens.
The administration under President Yoon Suk-yeol also intends to lower the top corporate tax rate from 25% to 22% and simplify the tax bracket from four to two or three.
Crypto Tax Regime To Take Effect In 2025
The country’s crypto tax regime, which was postponed by two years in December, is set to take effect on Jan. 1, 2025. Under the current law, taxpayers with more than 2.5 million Korean won ($1,865) in digital asset gains in a year will have to pay a 22% tax on their profits. The tax regime on financial investment income is scheduled to commence on the same day.
Jeong said that the government plans to submit an amendment to the income tax law regarding financial investment taxation in late January or early February, according to ZDNet. The national election for the National Assembly is slated for April 10, giving the current lawmakers a narrow window to review and pass the proposed amendments.
The issue of crypto taxation has been controversial in South Korea, as some argue that it is unfair to tax digital assets that are not legally recognized as currencies or financial assets. Others contend that crypto taxation is necessary to prevent tax evasion and money laundering and to align with the global trend of regulating the crypto market.
The government has also implemented strict measures to monitor and crack down on illegal activities in the crypto sector, such as requiring real-name verification for digital assets transactions and banning cross-trading on crypto exchanges.
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