What 2024 Means for Investors
In the latest development, the main opposition Democratic Party of Korea (DPK) agreed on Sunday to delay the controversial crypto tax for two years after investors responded. The final step will bring the implementation of the tax to 2027, which has allowed the market more time to adapt to the significant change in the country's tax position on digital assets.
“After extensive discussions, we concluded that additional institutional arrangements for virtual property tax are necessary,” DPK floor leader Representative Park Chan-dae said during a press conference at the National Assembly. “We agreed to extend the tax for two years.”
Park also pointed out that the decision was made after a ‘long discussion, debate and political judgement'.
The decision comes after months of conflict between the ruling PPP and the KDP. P.P.P. While supporting a three-year grace period, the KDP has previously pushed for the tax to be implemented by 2025 and has accused the ruling party of using delays as a political strategy vis-à-vis South Korea.
South Korea Travel with Crypto Tax
South Korea's move to rein in cryptocurrency profits began in 2021, when the government proposed a 20% tax on digital asset profits of more than $1,800 a year. But criticism from investors and industry stakeholders has led to repeated delays. Notably, the implementation of South Korea's crypto tax was first pushed to 2023, then to 2025, and now to 2027.
The current tax framework taxes earnings above 2.5 million won, while stock trading profits above 50 million won are taxed, a difference that has been widely criticized.
Government plans to impose crypto taxes
Starting next year, the government plans to impose a 22 percent tax, including local tax, on annual income of more than 2.5 million won ($1,790) from virtual property investments. Although the policy was extended twice, the DPK first raised the tax exemption threshold to 50 million to implement the tax plan.
However, growing opposition from crypto investors and the ruling People's Power Party (PPP) has led to widespread criticism that the party has agreed to an extension.
Also read: Crypto Regulations in South Korea 2024,
South Korea has become a key player in the international market.
South Korea has been a key player in the global crypto market. In particular, the decision to delay South Korea's crypto tax reflects the government's cautious approach to balancing market growth.
In particular, in the first half of 2024, the country's daily crypto trading volume increased by 67% from the previous period to six trillion won. Local media source Naver also reported that the number of domestic investors increased by 21% to 7.78 million, with Bitcoin and Ethereum comprising the majority of holdings.
