Changes intended to delay the introduction of a tax on virtual assets such as cryptocurrencies in South Korea have been approved by a major parliamentary committee. The bill seeks to delay Seoul’s plan to impose a 20% levy on earnings from crypto transactions.
Ahead of election, major parties back tax break for crypto investors in South Korea
South Korea’s parliament is taking action to suspend a planned tax on profits from investments in digital assets for another year. The move was supported by the ruling Democratic Party, despite disagreements with the government itself, as well as by the main opposition party, the People Power Party.
The amendments, which also provide for an increase in the capital gains tax exemption for real estate sales amid rising real estate prices, are seen by Korean politicians as a popular proposal. ahead of the next presidential election in March next year, the Korea Joongang Daily noted in a report.
The National Assembly’s Strategy and Finance Committee adopted the changes to the respective provisions at a meeting on Tuesday. The vote followed approval of the revisions by its sub-committee on taxation in a meeting on Monday.
Authorities need more time to put in place a taxation system for crypto assets
The two Korean parties have agreed to postpone the adoption of a 20% tax on annual profits from investments in virtual assets exceeding 2.5 million won ($ 2,102). The government planned to introduce the tax on January 1, 2022, but the recent vote indicates that the tax will likely be suspended until 2023.
The Democratic Party has insisted that cryptocurrency investments have become very popular with young voters who are also struggling to save enough money for a house amid soaring house prices. The party also hopes that the increase in the capital gains tax exemption for owners of single-family homes that sell from a price of 900 million won to 1.2 billion won ($ 1 million) , will help increase the availability of housing on the market.
Representatives of the DP argued that the Korean tax authorities need more time to establish an appropriate tax system for investing in virtual assets. However, Finance Minister Hong Nam-ki opposed the postponement, saying “the government is ready to immediately tax virtual assets.” He nevertheless noted that the executive branch will abide by any decision of the parliament, which is expected to vote on the amendments in early December.
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