South Korea Democratic Party pushes for 2025 crypto tax
South Korea plans a 2025 crypto tax with higher limits
The Democratic Party of South Korea has reignited debates over cryptocurrency taxation, insisting on introducing a tax on crypto gains starting in 2025. This move opposes the ruling People’s Power Party, which proposed delaying the tax implementation until 2028.
The Democratic Party of South Korea has accused the People’s Power Party of using the postponement as a political strategy ahead of future elections, reports Cointelegraph.
Higher taxable income threshold proposed
Under the initial proposal, crypto investors would face a 20% annual tax on profits exceeding 2.5 million won (approximately $1,800). This plan, originally scheduled for 2021 but repeatedly postponed due to public and industry backlash, is now set to take effect in 2025. However, widespread criticism from stakeholders prompted the Democratic Party of South Korea to propose a significant amendment: raising the taxable income threshold for crypto gains to 50 million won (around $36,000).
The Democratic Party argues that this adjustment aligns cryptocurrency tax policy with South Korea’s stock market regulations, which only tax profits exceeding the same amount. By increasing the threshold, the party aims to address investor concerns while ensuring that the tax targets only substantial crypto profits. The Democratic Party believes the change will have little impact on retail investors, as only a small percentage are likely to exceed the proposed $36,000 limit.
Politically charged debates
The tax issue has become a contentious topic between South Korea’s political factions. The People’s Power Party, which proposed the 2028 postponement, claims that the crypto industry needs more time to adapt to regulation. However, the Democratic Party views the delay as a populist maneuver intended to secure voter support in upcoming elections.
Despite their differing approaches, both parties acknowledge the importance of regulating the rapidly growing cryptocurrency market in South Korea. The Democratic Party’s proposal seeks to balance investor protection with promoting innovation, ensuring that the tax primarily affects institutional investors and high-profit traders.
Looking ahead
South Korea initially planned to introduce a capital gains tax on cryptocurrencies in 2021, but strong opposition led to multiple delays. If the Democratic Party’s plan is approved, the tax will be implemented in January 2025, with the new threshold serving as a compromise that may appease critics while addressing long-term regulatory goals.
Notably, the South Korean government previously announced plans to impose stricter reporting requirements on crypto companies and individual investors involved in cross-border transactions.
