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South Korea’s Democratic Party of Korea (DPK) has announced plans to enforce a 20% tax on cryptocurrency gains starting January 2025, ending years of postponements. The move marks a significant step toward regulating the rapidly growing crypto market in the country.
Originally slated for January 2022, the tax faced delays due to opposition from investors and industry experts. However, the Seoul Shinmun reports that the DPK has resolved to move forward with the taxation plan, albeit with critical adjustments to ease investor concerns.
Key Revisions to the Crypto Tax Policy
- Higher Exemption Limit:
- The annual exemption threshold for crypto gains will rise from 2.5 million won ($1,795) to 50 million won ($35,919).
- This change aims to shield smaller investors, ensuring the tax affects only a small portion of high-gain traders.
- Simplified Tax Calculations:
- Taxpayers without precise purchase records can calculate taxes using a percentage of the sale price as a proxy for acquisition costs.
- Minimal Impact on Investors:
- With the higher exemption limit, the revised policy will apply to far fewer individuals, reducing the overall impact on South Korea’s crypto investors.
The updated plan is scheduled for a vote by the National Assembly’s tax subcommittee on November 25, followed by a general legislative session on November 26.
Stricter Enforcement and Local Crackdowns
South Korean local governments are stepping up efforts to enforce tax compliance:
- Crypto Seizures:
In June, officials in the Jeonbuk (North Jeolla) Special Self-Governing Province confiscated cryptocurrency worth $138,000 from tax offenders.
The city of Paju recently warned 17 residents to settle overdue taxes by November’s end or face liquidation of their crypto holdings. - Advanced Tracking Tools:
Local authorities are employing sophisticated software solutions to identify crypto-related tax evasion and ordering exchanges to share wallet details of suspected offenders.
Crypto as a Financial Alternative in South Korea
A growing number of South Koreans view cryptocurrencies as a viable financial tool:
- Young Investors Turn to Crypto:
A recent survey found that over 75% of South Koreans aged 20-39 distrust the national pension system, preferring to build retirement funds with stocks and crypto.
More than half of these respondents actively use crypto as part of their long-term financial strategies. - Crypto Ownership Among Leaders:
Approximately 7% of election candidates disclosed ownership of digital assets, reflecting growing acceptance of crypto among South Korea’s elite.
Stricter Token Regulations on the Horizon
South Korea is also introducing stricter guidelines for token listings on exchanges.
- Tokens affected by hacks or fraudulent activity will face delisting under new regulations.
South Korea’s Role in the Global Crypto Ecosystem
The upcoming crypto tax law and enhanced regulations underscore South Korea’s commitment to balancing innovation with regulatory compliance. As the nation strengthens its position in the global crypto ecosystem, investors and governments alike will be watching closely.
For more updates on crypto taxation, regulatory developments, and blockchain innovations, visit CentBit.Online — your premier source for blockchain expertise in Bangladesh.
