South Korea’s main opposition Democratic Party of Korea (DPK) announced today that it has decided to postpone the implementation of a controversial cryptocurrency tax policy by two years, citing the need for additional institutional regulations and a backlash from investors.
The postponement comes after a proposed financial investment income tax was shelved last month for similar reasons.
The tax plan, originally scheduled to go into effect next year, aimed to impose a 22% tax (including local taxes) on annual virtual asset income exceeding 2.5 million won ($1,790). The policy has been postponed twice before, with the DPK initially seeking to implement it with an increased tax exemption threshold of 50 million won ($35,780).
However, growing discontent among cryptocurrency investors and opposition from the ruling People Power Party (PPP) led to further delays.
DPK grassroots leader Representative Park Chan-dae made statements on the issue at a press briefing at the National Assembly:
“After extensive discussions, we concluded that additional institutional arrangements were necessary for the taxation of virtual assets. We agreed to postpone the taxation for two years.”
He added that the decision was taken after “lengthy negotiations, discussions and political reasoning.”
The ruling PPP, which has long advocated for the crypto tax law to be repealed, welcomed the move. PPP leader Han Dong-hoon called the delay a “good outcome for the youth,” saying it was important to support younger generations in building their wealth.
“No policy can prevail against the will of the people,” Khan wrote in a Facebook post.
The DPK’s step back is its second in recent times regarding financial taxation. Earlier this month, the party abandoned plans to introduce a financial investment income tax, citing a “difficult domestic stock market.”
The postponement of the cryptocurrency tax will be made official with an amendment to the Income Tax Law, which is expected to be passed by the plenary session of the Parliament on Monday.
*This is not investment advice.
