Yoon Seok-yeol, South Korea’s newly elected president, said on Tuesday that he will push to postpone taxation on crypto investment gains at least until the Digital Asset Basic Act (DABA) is passed.
The crypto tax in South Korea was supposed to go into effect in the fiscal year 2022, but it was postponed until 2023 in December. According to E-daily, Yoon will ensure that the crypto tax bill does not take effect until a reasonable consumer protection law is in place, which may be as early as 2024.
Since March, when Yoon won the election, the president-elect’s presidential transition team has been looking at delaying the tax on the grounds that there isn’t enough legislation in place to justify levying taxes on digital assets.
The Financial Services Commission (FSC) conceived DABA this year, and it involves a set of consumer protection rules.
The act covers token issuances, nonfungible tokens (NFT), centralized exchange (CEX) listings, international crypto finance, and a response to US President Joe Biden’s executive order on crypto.
The FSC intends to implement a crypto insurance scheme through DABA as a backup against hacks, system faults, and unlawful transactions.
The contentious crypto tax law, which has been postponed again again, would impose a 20% tax on crypto investment gains exceeding $2,100 per year.
“Taxation of investment income from virtual assets should be done after investor protections are in place,” an FSC representative told E-daily on Tuesday.
South Korean crypto venture capital firm Hashed CEO Simon Kim agreed, said that “it doesn’t make sense to impose a tax on cryptocurrency before enacting relevant statutes, which clearly state cryptocurrency-related businesses’ scope and are a prerequisite for taxation.”
“Without profound research on the industry and robust implementation strategies, promoting taxation on cryptocurrency can cause a variety of accidents and raise some serious issues in taxation equity because an investor protection system for cryptocurrency has yet to be implemented.”
Yoon proposes to establish the Digital Indusry Promotion Agency to act as a reference point for regulatory issues in the crypto industry while the FSC works on new bills as part of DABA.
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