South Korea’s Democratic Party (KDP) is advancing its plan to implement a crypto gains tax beginning in 2025, while also suggesting an increase in the taxable gains threshold. On Nov. 20, Seoul Shinmun Daily reported that the KDP has challenged the ruling People’s Power Party’s (PPP) proposal to delay the taxation of cryptocurrency gains until 2028.
The PPP, the ruling political party, had proposed on July 12 to delay the introduction of crypto gains taxation until 2028. The KDP argued that the PPP’s deferral plan was a political tactic that could be used in future elections to gain favor with voters.
As part of its plan, the KDP aims to raise the threshold for taxable cryptocurrency gains. Under the initial proposal, crypto investors would have faced a 20% annual tax on profits exceeding 2.5 million won (approximately $1,800). This plan drew significant backlash from both stakeholders and investors in the crypto industry.
In response, the KDP has put forward a revised proposal to increase the threshold to gains exceeding 50 million won (about $36,000), aligning it more closely with the country’s tax policy on stock investments. The KDP suggested that raising the taxable gains threshold is akin to reducing the overall impact of the crypto tax, as only a small number of investors generate profits greater than $36,000 from their crypto activities.
The KDP maintains that, under the new threshold, the crypto gains tax would primarily affect larger investors, while small investors would face minimal tax implications.
South Korea has been debating the issue of crypto taxation for several years. Originally scheduled for implementation in 2021, the crypto gains tax was postponed to 2023 due to opposition from industry stakeholders. It was subsequently delayed again to January 1, 2025. If the KDP and the ruling party come to an agreement, the 20% capital gains tax may still come into effect in 2025.