South Korea has once again delayed the implementation of a cryptocurrency tax regime. The 20% capital gains tax will now come into effect in 2025.
South Korean authorities have decided to postpone taxation of the asset class until 2025, according to an official announcement. The 20% capital gains tax on cryptocurrencies was expected to come into effect from the start of 2023 and offered a few reasons for the delay. The tax plan had already been delayed before.
The 20% tax would apply to crypto gains that exceed $1,900 in a one-year period. Some market enthusiasts feel aggrieved about this rule, as they feel that taxing gains above $1,900 is too strict. Smaller investors, in particular, would be hurt by this particular threshold.
The reasoning behind pushing back the taxation was that market conditions were stagnant and that some time was required to implement investor protection measures. The chairman of the Tax Subcommittee, Kim Young-jin, said that broader crypto regulation, in general, was necessary before going ahead with taxation.
Korea’s focus on crypto tax has been a subject of discussion since 2021 when the country first delayed crypto tax to 2023. The decision to tax the asset class has been met with some criticism, though there was some relief that NFTs would be excluded from taxation.
As for crypto regulation, the financial regulator of South Korea has been ramping up its efforts considerably. The authority recently began probing foreign exchange transactions at commercial banks for the illicit use of cryptocurrencies. Its investigation of Terra has also frequently been making the headlines.
Cryptocurrencies have been on the mind of several countries in recent months. This is unsurprising, given how quickly the market has grown and gained investors over the past two years. After allowing the asset class to operate following much deliberation, these countries have turned to taxation to impose some sort of control on the market.
India is among the many countries that have made the news for their taxation efforts. The country imposed a large 30% tax rule on crypto starting from April 1 this year, a move that has significantly reduced the amount of trading going on.
The United States Internal Revenue Service (IRS) has also stepped up its monitoring game. It has been working with the U.S. Treasury to ensure that cryptocurrency brokers and exchanges report client trading data.