South Korea’s Democratic Party (KDP) plans to introduce a bill at the Planning and Finance Committee on November 26th to settle on new crypto taxation laws.
The party’s bill proposes to increase the virtual asset tax deduction threshold to 50 million won, roughly $36000, targeting “big industry players.”
South Korea’s Democratic Party believes the amendments will mostly affect large crypto holders
On November 26th, the Korea Democratic Party plans to advance its proposed tax amendment, raising the deduction limit for crypto profits to 50 million won.
Previously, the party had proposed new taxes on crypto gains starting from actualized profits of 2.5 million won, equal to about $1,800. However, after facing much criticism from crypto investors, the party had to rethink its proposal.
Its new amendment is said to have raised the deduction amount to $36000 and permits taxpayers to use up to 50% of the total transfer price when the actual acquisition price of virtual assets cannot be verified. This enables them to claim profits of up to half the transfer price tax-free.
However, the new proposal contrasts with its backing to eliminate the financial investment income tax (FIT) for crypto assets, with analysts pointing to more investor backlash.
The party has, however, justified its new proposal, saying that the tax changes will only affect big crypto players. A Finance Committee official remarked:
The deduction limit is set at 50 million won, but assuming a 5% return, the investment amount should be at least 1 billion won. This could have the effect of most investors, except for a very small number of ‘big players,’ not being included in the tax target.
~Korea Democratic Party
South Korean crypto investors could be taxed starting January 2025
The Democratic party plans to have the new bill voted on by the Tax Subcommittee of the Planning and Finance Committee on the 25th and then proceed to the plenary session on the 26th.
However, if the Planning and Financing Committee fails to reach a consensus, the proposed amendment bill will be forwarded to a plenary session on December 2nd.
Should the ruling and Democratic parties disagree on the changes thereafter, it could mean reverting to the initial tax plan, which would apply the 2.5 million won deduction limit starting January 2025.
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