Parties agree to delay taxation on crypto gains

Parties agree to delay taxation on crypto gains

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By Park Jae-hyuk

The ruling and main opposition parties reached an agreement on the idea of delaying taxation on the gains from cryptocurrency trading to 2023 from the initially planned 2022, in an apparent attempt to win support from voters in their 20s and 30s during the presidential election next year.

Rep. Noh Woong-rae of the ruling Democratic Party of Korea (DPK) said Monday that the members of the subcommittee on taxation under the Strategy & Finance Committee of the National Assembly held an unofficial meeting a day earlier and agreed partially to his proposal of a revision to the Income Tax Act.

According to the lawmaker, the subcommittee members supported his idea of putting off the introduction of the taxation by a year, although they did not accept his proposal of raising the threshold of the taxation on gains from virtual asset transactions to 50 million won ($42,000) from 2.5 million won.

“The delay is reasonable, considering that the government is not allowed to push ahead with such an underprepared taxation,” he said in a press release. “It is regrettable that the finance ministry’s opposition made it impossible to raise the threshold.”

The lawmaker expects the revision of the Income Tax Act to be passed without difficulties, although his proposal needs agreement from the Strategy and Finance Committee members and the Legislation and Judiciary Committee members, in order to be sent to a plenary session slated for early next month.

“Given that the ruling and main opposition parties reached an agreement, it can be seen that the taxation on virtual assets has been delayed for a year,” he said.

The minor opposition Justice Party, whose lawmakers are not on the subcommittee, criticized the two large parties for using the issue for a shortsighted “political purpose.”

“The agreement may allow them to gain more votes in the election, but this will harm fairness of the tax system,” Justice Party lawmaker Jang Hye-yeong said in a statement.

Both the ruling and the main opposition presidential candidates have already claimed that the taxation should be postponed.

“It is difficult to justify the hastened taxation with insufficient preparation,” DPK presidential candidate Lee Jae-myung wrote on Facebook earlier this month. “It will cause tax resistance and confusion.”

People Power Party (PPP) presidential candidate Yoon Seok-youl also expressed his skepticism earlier about imposing taxes on gains from cryptocurrency trading under the current system.

The Ministry of Economy and Finance, however, has maintained the stance that the government should start collecting tax on cryptocurrency gains next year as planned and that the government has been fully prepared to do so.

“Last year, the ruling and opposition parties agreed to impose the tax starting next year,” Deputy Prime Minister and Finance Minister Hong Nam-ki told lawmakers earlier this month. “It is inappropriate to force the government to withdraw the plan.”

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