According to reports, the People Power Party, South Korea’s opposition party, has proposed a one year delay in the implementation of the tax rules for trading digital assets. They also plan to change the tax rate percentage, meaning that investors who earn more than $42,000 should be paying 20%. The initial legislation taxes gains over $2,900.
Are You Not Ready?
The current proposals state that South Korea will begin taxing profits earned from trading in cryptocurrencies starting January 1, 2022. Hong Nam-ki, the Finance Minister of South Korea, called the move “inevitable”.
But, South Korea’s People Power Party has some objections. According to The Korea Herald, lawmakers from the party are planning to introduce a bill that would allow them to postpone taxation rules until January 1, 2023. Rep. Cho Myounghee – a member of the opposition – explained:
It is wrong to impose taxes at the first time virtual currency is unclearly defined. To ensure that virtual currency investors don’t suffer disadvantages, the intention is to reduce the tax base to financial investment income tax.
They would also like to see a reduction in the tax rate. The financial regulators would punish any South Korean who earns more than $2900 with 20%. However, the People Power Party plans to increase that limit to those with profits between $42,000 to $251,000. 25 percent would be charged to those who earn more than $251,000.
However, Hong Nam-ki, Finance Minister, was again not open to the idea.
“It is difficult for policy reliability and legal stability to delay the taxation of virtual assets.”
The Democratic Party Wants a Delay
Notable is the fact that the ruling Democratic Party of South Korea tried to delay the forthcoming taxation rules. According to CryptoPotato, a bill was passed by lawmakers that could have suspended the legislation completely. Noh Woongrae, a member of the Democratic Party, stated back then that the East Asian nation doesn’t have a well-designed plan for implementing the taxing procedure.
“When the taxation infrastructure for virtual assets is not adequate, deferral taxation on virtual assets will no longer be an option. It is an inevitable situation.”
Woong-rae stated that the Ministry of Finance’s plan to impose taxation on digital asset ventures would not work as planned. He said that it was difficult to tax overseas operations using cryptocurrencies or peer-2-peer (P2P), transactions.
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