6 hours Ago By [email protected](KoreaTimes)
A representation of Bitcoin and a price chart are seen in this October 2023 photo illustration. Reuters-Yonhap DPK pushes higher tax deduction limits; PPP demands abolition By Lee Yeon-woo The move by the main opposition Democratic Party of Korea (DPK) to implement crypto taxation policies in 2025 despite opposition from the ruling People Power Party (PPP) is triggering backlash from investors, with some experts warning that it could lead to a capital exodus. According to industry sources on Thursday, the DPK is determined to pass a revised Income Tax Act at Tuesday's upcoming National Assembly meeting.
The key proposal involves raising the tax exemption threshold from the current 2.5 million won ($1,787) to 50 million won in profits earned from crypto investments. The DPK believes the revision will ease retail investors' opposition to the crypto taxation policy by shifting the tax burden to some high-net-worth individuals.
Starting next year, the government plans to impose a 22 percent tax, including local taxes, on annual income exceeding 2.5 million won from virtual asset investments. The policy has already been postponed twice following the bipartisan agreement.
The DPK's latest move has surprised many market watchers. They had anticipated another delay in crypto taxation, especially after the financial investment tax was scrapped on Nov. 4.
The financial investment tax and virtual asset taxation were initially proposed together, with plans to classify virtual asset income as financial investment income and tax it accordingly. "Why tax one while abolishing the other? This raises serious questions of fairness," a man in his 20s wrote on the National Assembly's online petition platform. The petition, posted on Tuesday, has since garnered over 56,000 signatures.
"Past administrations have viewed cryptocurrencies negatively," he wrote. "They did not recognize cryptocurrencies as assets and even rejected Bitcoin exchange-traded funds . Imposing taxes without legal recognition or clear regulatory framework? This is inconsistent and unreasonable.
" Crypto exchanges rush to list more meme coins to capitalize on Trump election effect 2024-11-21 16:12 | Cryptocurrency The DPK, however, argues that the stock market and the virtual asset market are fundamentally different and should not be treated the same. Han Dong-hoon, right, leader of the ruling People Power Party (PPP), speaks at the party meeting in the National Assembly, Seoul, Thursday. Yonhap The PPP opposes the taxation on virtual assets, backing retail investors.
During a party meeting on Thursday, PPP Leader Han Dong-hoon said that implementing "fair and equitable taxation is challenging" given Korea's current level of preparation and added that the party will ensure the implementation of a two-year deferral. "Over 8 million investors in Korea are primarily young people," Han said. "Many are hoping to recover their losses during this period (Trump's rally), but the DPK has introduced policies that dash those hopes.
" Despite the PPP's objections, the DPK's parliamentary majority makes it likely that the proposal will pass unless the party alters its stance. Critics warn that these measures could lead to a capital exodus to foreign virtual asset exchanges. "Substantial funds have already shifted to overseas exchanges to exploit arbitrage opportunities from the ' kimchi premium ,' and this trend is expected to accelerate as tax burdens increase," said Jay Jo, a senior research analyst at Tiger Research.
They also worry that enforcing strict regulations without careful consideration could harm Korea's global competitiveness . Strong retail investment in Korea has attracted significant interest from overseas crypto projects , and harsh tax policies could deter further investment. "While virtual assets are a sector that requires taxation in the long term, the current tax proposal fails to fully account for (Korean) market's characteristics and crypto's rapidly evolving environment," Jo said.
"A well-structured taxation system must be preceded by comprehensive research and thoughtful discussion." As of 3 p.m.
Thursday, Bitcoin is traded at 137.3 million won in Korea's largest virtual asset exchange, Upbit, and $97,180 in Binance. The price saw another record high, reaching $96,995 at 1:22 p.
m. (local time), following a media report that the U.S.
presidential transition team was considering creating a specialized position for crypto policy in the White House. Bitcoin prices have surged about 40 percent since Donald Trump's election. If the ruling and opposition parties fail to reach an agreement on a delay, all investors earning profits exceeding 2.
5 million won will be subject to taxation..
