After several delays, the South Korean government is going ahead with a plan to tax cryptocurrency holders.
The South Korean government issued an amendment on Wednesday to introduce a tax on profits from cryptocurrency trading.
Following a legislative notice lasting until Jan. 21, the amendment is likely to be enacted in February, Asia Today reported. It would only start levying taxes on cryptocurrencies in 2023, however.
The proposal would introduce a variety of additional taxes on capital gains, with a progressive taxation schedule for gains in stocks. For cryptocurrency holders, anyone making an annual income of more than 2.5 million won ($2,300) from cryptocurrency profits will be taxed at 20%. The threshold is much lower than for stocks, where only gains of over 50 million won ($46,000) will be taxed.
For cryptocurrencies owned before the beginning of the tax schedule, authorities will consider the highest of either the market price immediately before 2023, or the actual acquisition price.
The proposed tax regime was anticipated and delayed several times in 2020. Following lobbying from local cryptocurrency advocates, the government initially pushed back implementation until 2022. Now, the government appears to have set the date in stone, though it is accommodating a further delay.
Though the relative popularity of cryptocurrencies in Korea declined following the 2018 bear market, exemplified by Binance Korea failing to establish itself, it remains a stronghold of cryptocurrency adoption.
The Korean government pushed for a variety of blockchain-based initiatives in the fields of digital identity and blockchain voting. It also designated major population center Busan as a “blockchain city,” though some reports suggest that the categorization is lacking substance.
At the same time, the government has adopted a firm stance for certain classes of crypto assets, notably requiring many local exchanges to delist privacy coins. It had also put executives from major local exchange Bithumb under investigation for alleged fraud.