During recent weeks, media outlets and lawmakers have been criticising the South Korean government’s plans to introduce a tax on crypto trading from 2022. Many have suggested that Seoul will have to back down from its plans.
Last week it was reported that the National Assembly will assess four separate bills, proposed by private members, that seek delay or amendments to the levy 20% capital gains tax charges that are due to be put in place. As it stands, the taxes will be placed on any trading products above an annual threshold of $2100 in January 2022.
The National assembly has already agreed on the measure, which was bundled into a range of other tax reforms. Since the tax was approved, the subject has become an increasingly hot topic. Earlier this month, the Deputy Prime Minister and Finance Minister, Hong Nak-ki and Kim Dae,ji (the Head of the National Tax Service) said that there was no way to delay the new tax, despite criticism from MPs.
Critics of the new law claim that the tax is discriminatory. Traders are particularly angered by the threshold as KOSDAQ stock market investors have a threshold of around $42,000. Both Hong and Kim have admitted that “practical difficulties” still remain but refused to budge. Media outlets have suggested that their opinions could be swayed by powers that are stronger than even the government itself.
Chosun Ilbo reported that despite Hong’s assertions, the sentiment of the national Assembly was that the new tax law will be “amended in the direction of delaying the taxation of crypto assets before the year is out due to next year’s elections.”
South Korean general elections will take place in March 2022 and will be followed by local elections in the summer of 2022. Both elections have the potential to change the face of South Korean politics.
Senior figures in the ruling Democratic party have been furiously back-pedaling on crypto tax as they attempt to win the vote of younger voters.
Other leading candidates have also weighed in on the dispute. Chosun quoted the Gyeonggi Province Governor, lee Jae-myung, opining that the “taxation of crypto assets should be delayed by one year.”
The People’s Power Party, leading opposition to the Democrats, has been playing to the division. The party is behind three of the four bills that have been proposed to delay the taxation.
The most popular bill that has been proposed so far was authored by People’s Power MP Cho Myung-hee. The bill proposed to push that tax back until 2023 and to establish a parity with the KOSDAQ trading threshold.
