Regulators in the South East Asian Country say the South Korea crypto tax proposals have been shelved until at least the start of 2023 as commissioners look to define how to classify digital assets as a financial investment.
A representative from the government said that the new tax regime, which was originally meant to come into force in July of this year, were being put on hiatus, mainly due to the problems the country was having with tracking crypto assets due to the decentralized and largely anonymous nature of how blockchains work.
South Korea Crypto Taxes shelved for now as lawmakers face hurdles in classification
The Ruling Democratic Party clearly expressed its objection to the taxation of virtual assets from next year as originally scheduled in consideration of the fairness of taxation. Rep. Roh pointed out that the Ministry of Finance’s policy of enforcing the taxation of virtual assets next year is an administration that ‘ignores reality’, meaning the reality of the situation of actually attempting to track virtual assets held by citizens of the country.
“The deferral of taxation on virtual assets does not require permission from the Ministry of Finance, but it is a matter to be decided by legislation. It will not only undermine trust in the government, but will only encourage tax evasion.”Rep. Noh Woong-rae of the Democratic Party of South Korea
Several bills were proposed by opposition parties to suspend South Korea crypto tax after The Ministry of Strategy and Finance passed the Income Tax Act which saw virtual assets classified as “other income” previously, setting a 20% levy on income over 2.5 million Won. This essentially looked like the country was going after assets in wallets on crypto exchanges.
At the same time, the South Korean government also proposed expanding taxes on companies which hired foreign workers, and cut corporate taxes for companies which were focused on ‘bringing production capacities back to the country’.