South Korean lawmakers are inundating parliament with crypto tax delay bills. The National Assembly’s financial committees are in the midst of weighing up the values of four separate attempts to derail Seoul’s plans to implement 20% capital gains tax charges on all cryptocurrency trading profits over $2,100 (per year).
The South Korean government has attempted to deal with the issue, after the National Assembly approved crypto taxes earlier this year. The new taxes do not come without opposition. Since the bill was passed, both exchanges and private investors have voiced concerns about how the crypto tax will be carried out. Some have claimed the tax is largely unfair, particularly as KOSDAQ stock market investors’ profit threshold is currently $42,000.
Last week, the Deputy Prime Minister and Finance Minister Hong Nam-ki and Kim Dae-ji, the head of the National Tax Service (NTS), were questioned separately by the National Assembly’s Planning and Finance Committee on crypto tax-related topics. The two figures both claimed that there was no way to delay the new tax, which is due to take effect on January 1, 2022.
Despite their apparent desire to stay on track with the initial timeline, both men did admit that “practical difficulties” with implementing the tax still remained.
As it stands, 3 separate bills could still test the government’s resolve. The ruling Democratic Party is split on the issue of crypto tax, and with elections looming in March 2023, pushing through unpopular tax levies could lose the support of younger voters. That being said, a recent poll found that most South Koreans actually support the introduction of a crypto tax on trading profits. Opposition of the new tax law was lowest amongst younger voters.
The present government rose to power through a youth-led movement. For this reason, the party is wary of losing its support base, many of which have taken to crypto in the past 12 months.
A recent feature in The Electronic Times reported that Cho Myung-hee, a member of the opposition People’s Power Cryptoasset Special Committee, has proposed an amendment to the Income Tax Act that would see the new tax delayed by a year, added to income tax calculations and would bump the reporting threshold up to parity with KOSDAQ stock trading levels.
Two other People’s Power MPs, Yoon Chang-hyeon and Yoo Kyung-joon, have also proposed separate attempts to delay the tax to 2023 and 2024. A fourth bill from Noh Woong-rae, of the Democratic Party, has also put forward a proposed income tax amendment that would defer any taxation on profits by a year. This bill would see crypto income classified as “financial investment income.”
Relevant committees of the government will spend the next few days considering all four bills. There is a possibility that the authors of each may decide to combine their amendments and streamline the process.
As the crypto-tax debates are happening, the Korea Customs service has promised to issue another crypto “crackdown”. The service wants to make legal amendments and “push for revisions to the Customs Act” – to impose more fines “for non-submission or false submission of customs data.”
It also wants new powers to allow it to seize the assets of tax “dodgers” who make use of crypto, and will seek to share information with the Ministry of Public Administration and Security.
The Korea Customs service was to tackle “price manipulation”, likely referencing traders that it has attempted to prosecute in the past. These traders exploit the difference between prices on domestic and international exchanges, buying bitcoin (BTC) and altcoins over-the-counter abroad and then selling coins on domestic platforms.
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