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The Democratic Party of Korea (KDP) is moving forward with plans to tax cryptocurrency profits starting in early 2025, including raising the threshold for taxable profits.
On November 20, local media outlet Seoul News reported that the KDP is challenging the ruling People Power Party’s (PPP) plan to delay the cryptocurrency tax until 2028.
The ruling PPP proposed on July 12 to postpone the taxation of cryptocurrency profits until 2028. The KDP claims that the PPP’s delay is a political strategy intended to be repeated in future elections.
The KDP is pushing for the introduction of a cryptocurrency profit tax in 2025 but is open to raising the threshold for taxable cryptocurrency profits. According to the initial tax plan, cryptocurrency investors would have to pay a 20% annual tax on profits exceeding 2.5 million won ($1,800). However, this plan faced resistance from stakeholders and cryptocurrency investors.
The KDP has proposed a new plan to raise the profit threshold to over 50 million won (approximately $36,000), similar to the country’s stock tax policy.
The KDP states that raising the threshold for taxable profits effectively amounts to abolishing the cryptocurrency tax. The tax impact is minimal because only a few investors have cryptocurrency investment profits exceeding $36,000.
The party also emphasizes that under the new threshold, only large players would be affected by the cryptocurrency profit tax.
South Korea’s capital gains tax on cryptocurrency was initially set to be imposed in 2021, but due to resistance from cryptocurrency stakeholders and industry partners, the government postponed the implementation to 2023.
Due to growing investor concerns, the tax was delayed again to January 1, 2025. However, if the KDP and the ruling party reach an agreement, the 20% capital gains tax could be introduced as early as next year.
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