South Korea to Enforce Cryptocurrency Gains Tax by 2025 with Investor-Friendly Revisions
South Korea's Democratic Party of Korea (DPK) has confirmed plans to implement a long-delayed cryptocurrency gains tax starting January 2025. This decision, reported by Seoul Shinmun, signals the government’s commitment to tax reform despite calls for further delays.
New Cryptocurrency Tax Timeline and Adjustments
Initially set for January 1, 2022, the 20% tax on crypto gains (22% including local tax) faced strong opposition, leading to two postponements. While some proposals suggested extending the start date to 2028, the ruling party is determined to proceed in 2025, balancing tax reform objectives with investor concerns.
To accommodate traders, the DPK has introduced significant revisions:
- Increased Tax-Exempt Threshold: The exemption limit will rise from 2.5 million Korean won (approximately $1,795) to 50 million won ($35,919). This change aims to shield most small investors from the tax, leaving only a small percentage of high-gain traders affected.
- Simplified Tax Calculations: A new provision allows taxpayers to use a portion of the sale price as a substitute for the original purchase cost when exact records are unavailable. This adjustment addresses challenges associated with tracking acquisition costs in the volatile crypto market.
Key Voting Dates for Approval
The Democratic Party intends to present the updated tax proposal to the National Assembly’s tax subcommittee on November 25, followed by a general vote on November 26. If approved, the framework will establish South Korea’s first comprehensive tax policy for digital assets.
A Milestone in South Korea's Cryptocurrency Regulations
This revised tax plan marks a significant step in South Korea's evolving approach to cryptocurrency regulation. With a higher exemption threshold and simplified processes, the government aims to foster investor confidence while ensuring fair taxation of digital asset gains.
