South Korea’s Crypto Tax Law will not be Postponed

The agreement reached last week means that the cut-off date for the taxation of cryptocurrencies will remain January 1, 2022

The South Korean crypto tax law will go into effect as planned after Finance Minister Hong Nam-ki and lawmakers agreed to put it into effect despite lobbying for a postponement.

According to a report by a local news agency, the decision not to postpone the crypto tax law was made at a meeting on September 26. The meeting revealed that some deputies of the National Assembly had supported a postponement on the grounds that the necessary tax infrastructure was not in place.

Noh Woong-rae, a lawmaker from the Democratic Party, said in a statement that the law requiring the taxation of virtual assets must be revised as a whole. According to the legislator, the government must do more to protect investors, even if it wants to tax them.

The effective date of the tax law is set for January 1, 2022, which means that Bitcoin and other crypto transactions will be taxed from that date.

Crypto investors will have to file tax returns for crypto transactions for the year starting in January and pay investment income on them. The deadline for submission in 2022 will be from January to May 2023.

The Tax Law was amended in 2020 to include the taxation of crypto assets in the same way as the taxation of shares. The changes introduced a 20% tax on all cryptocurrency transactions over 2.5 million Korean won.

South Korea’s tough stance on cryptocurrencies

While the new tax laws are not expected to take effect until early 2022, the decision not to postpone them is in line with South Korea’s recent tough stance on cryptocurrencies.

Last month, several cryptocurrency exchanges and platforms failed to meet the September 24 deadline to comply with the new regulations. The authorities of the country allowed many exchanges to operate, as they introduced new guidelines for trading, with the aim of protecting customers.

By the time the deadline passed, only 29 platforms had met the requirements, while more than 40 crypto exchanges ceased operations.

Only four exchanges, the largest in the country, met the regulatory requirement that the user accounts must be identified with real bank accounts. Bithumb, Upbit, Korbit and Coinone are therefore allowed to offer trading pairs against the Korean won (KRW).

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