South Korean Parliament will consider the implementation of a tax on crypto income from 2025

What’s new? The opposition Democratic Party of Korea (DPK), which controls the majority of seats in South Korea’s parliament, will not push forward with further delaying the introduction of cryptocurrency taxes. Instead, lawmakers intend to implement the new levies as planned from early 2025.

Material by Seoul Shinmun

What else is known? It was originally planned that a 20% cryptocurrency income tax (22% including municipal levies) would be implemented on January 1, 2022. Due to negative reactions from investors and industry experts, officials held two postponements that ended up pushing the implementation date to January 1, 2025.

Although lawmakers discussed the possibility of pushing the implementation date to 2028, the DPK intends to implement the new fees on schedule, local media reported. Under the bill, citizens must pay the fee if the annual amount of cryptocurrencies exceeds 2,5 million Korean won ($1795).

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The plan is part of a broader campaign by Korean authorities to introduce comprehensive crypto regulation. The Virtual Asset User Protection Act came into effect in July, requiring crypto exchanges to keep client assets separate from their own and use licensed banks to do so, as well as maintain a fund in case of a liquidity crisis or hack.

In addition, exchanges are required to monitor suspicious trading activity to curb fraud and market manipulation. Fraud with a loss of more than 5 billion Korean won ($3,6 million) carries a life sentence.

At the same time, the Financial Services Commission (FSC), the main regulator of the crypto industry, launched its crypto transaction monitoring system, which also detects suspicious transfers.

On the tax side, several cities and provinces in the country have already started confiscating crypto assets from debtors from exchanges. In November, authorities in the city of Phaju again warned defaulters that they would not be able to use cryptocurrencies to hide assets. If the debts are not paid by the end of the month, their cryptocurrencies will be confiscated and sold.

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Earlier, the tax services of Brazil and South Africa began requesting user data from crypto exchanges, and the tax service of Kenya announced the introduction of its own system for monitoring crypto transactions in real-time.

In turn, the UAE authorities canceled VAT on transfers and conversion of cryptocurrencies, and the Turkish authorities refused to introduce a tax on crypto trading this year.