South Korea will impose a '20% Capital Gains Tax' on cryptocurrencies next year, with the tax-free threshold raised to 5 million Korean won

The ruling party in South Korea, the National Power Party, has finalized that the capital gains tax on cryptocurrencies will be officially implemented in 2025, and will no longer be postponed. According to the Seoul News, although there were suggestions to delay the implementation until 2028, the government has decided to proceed with the tax reform as scheduled.

The tax system was originally scheduled to be implemented in 2022 with a tax rate of 20% (including local taxes, a total of 22%), but due to strong opposition from investors and the industry, the implementation time has been postponed twice and is now scheduled for January 1, 2025. Although there are suggestions to further delay the latency until 2028, the National Power Party insists on implementing it according to the original plan.

However, in order to reduce the tax burden on some investors, the National Power Party has proposed a tax reform bill that will significantly increase the tax-exempt threshold from the original 2.5 million Korean won (approximately $1,795) per year to 50 million Korean won (approximately $35,919). This means that only a few high-profit earners will be affected, while most investors will be exempt from tax pressure.

In view of the volatile nature of the encryption currency market price fluctuation, the amendment also provides an alternative solution: when investors cannot provide clear purchase records, allowing a certain proportion of the selling price to be assumed as the original cost, and calculating the taxable amount.

The People Power Party emphasizes that raising the tax exemption limit to 50 million Korean won is almost equivalent to exempting most investors from taxes, and states that this is to seek a balance between ensuring tax fairness and promoting market development.

According to reports, the amendment is expected to be submitted to the Congressional Taxation Committee for review on November 25th, and further sent to the plenary session of the Legislative Yuan for deliberation on the 26th. It will only come into effect after it is successfully passed.

The article ‘South Korea to impose a ‘20% Capital Gains Tax’ on cryptocurrencies next year, and the tax-free threshold will be raised to 5 k Korean won’ was first published in ‘Blocktimes’.