South Korea's Ruling Party Contemplates Crypto Tax Delay Amid Election Campaign

Amid preparations for the upcoming general election in April, South Korea's ruling People Power Party is reportedly advocating for a further two-year postponement of taxation on cryptocurrency investment gains, according to local media sources.

The right-wing party asserts its intention to prioritize establishing a fundamental regulatory framework for the crypto sector before implementing taxation. Plans include proposing a new set of regulations specifically tailored to the crypto industry in the forthcoming term, as outlined in a report by the local news outlet Herald Business Daily on Monday.

Originally slated to commence on January 1, 2023, South Korea's crypto gains tax was deferred to January 2025. However, discussions within the ruling party suggest another potential delay, pushing the tax implementation to 2027.

As part of its election campaign strategy, the ruling party contemplates introducing a new bill containing pivotal elements for potential crypto regulations. These regulations would encompass requirements for crypto custody providers and token listing, supplementing South Korea's inaugural set of crypto regulations, set to take effect in July.

Finalization of the party's core election pledges is expected by month-end. The People Power Party has yet to respond to inquiries from The Block.

Crypto Tax Discourse

In a related development, last month, a representative from South Korea's Ministry of Economy and Finance proposed discussions regarding the potential abolition of income tax on crypto assets. This initiative aligns with the current administration's agenda to eliminate planned taxes on financial investments like stocks and funds.

However, contrary to complete abolition, the People Power Party reportedly aims to recalibrate the crypto tax threshold in line with that of stocks. While crypto gains exceeding 2.5 million Korean won ($1,875) are subject to a 22% tax, stock gains are only taxed when they surpass 50 million won.

Conclusion：South Korea Delays Crypto Tax

As South Korea prepares for its upcoming general election in April, the ruling People Power Party is advocating for a further two-year postponement of cryptocurrency investment gains taxation. The party aims to prioritize establishing a regulatory framework for the crypto sector before implementing taxation, potentially delaying it until 2027. This initiative aligns with the party's election campaign strategy, which includes introducing a new bill containing key elements for potential crypto regulations. Meanwhile, discussions also include recalibrating the crypto tax threshold to align more closely with that of stocks, amid proposals for the potential abolition of income tax on crypto assets.