The South Korean government is planning to extend the implementation of its 20% cryptocurrency tax bill to a later date, in a bid to woo crypto enthusiasts into supporting the ruling party, the Democratic Party of Korea (DPK), in the next year’s presidential election.
“The DPK reached a broad consensus in terms of delaying the timing of the taxation of cryptocurrency transactions for another year than earlier planned,” a DPK source told The Korea Times in a report published today.
South Korea’s Cryptocurrency Tax Bill
Recall that the country’s Ministry of Economy and Finance had announced in 2019 that it will be levying a 20% tax on cryptocurrency gains of over 2.5 million won ($2,125) made over one year.
The move, which was initially planned to be implemented last year, had been postponed on several occasions for multiple reasons, including the lack of taxation infrastructure for the asset class.
According to reports, the government resolved that its crypto tax would become effective from January 1, 2022, the same year the country’s presidential election is scheduled to be held.
However, due to recent stringent policies from the government, especially in the real estate sector, the ruling party has seen its popularity among citizens plunge.
To redeem its popularity among citizens and stand a chance in the forthcoming elections, the report noted that the DPK is planning to postpone taxing crypto gains for another year to woo young voters.
Per the sources, the Ministry of Economy and Finance is expected to protest against the planned move from the party, which consists of ruling party lawmakers.
Lawmakers Plan to Review the Bill
Another reason why the government may likely postpone implementing the 20% tax on crypto is to create more room for lawmakers to revise the proposed bill.
On September 13, Rep. Yoo Dong-soo, head of the party’s task force on cryptocurrencies, noted that crypto gains, which are classified as other income, should also see its maximum deductible amount raised to 50 million won, similar to what is tenable for other financial instruments like stocks, etc.
“The amount of tax will be determined by the legal definition of the digital asset,” Dong-soo said.
Opposition Lawmakers Call for Delay
Interestingly, lawmakers from the ruling party are not the only ones interested in postponing crypto taxation.
Reps. Yun Chang-hyun and Yoo Gyeong-joon of the People’s Power Party had earlier proposed a bill calling on lawmakers to delay implementing taxes on crypto for up to two years.