The South Korean government released an amendment on Wednesday to introduce a tax on profits from cryptocurrency trading.
Following a legislative notice lasting until January 21, the change is likely to go into effect in February, Asia Today reports. However, it wouldn’t start imposing taxes on cryptocurrencies until 2023.
The proposal would introduce a series of additional taxes on capital gains, with a progressive tax schedule for gains in shares. For cryptocurrency holders: Anyone who earns an annual income of more than 2.5 million won ($ 2,300) from cryptocurrency profits is taxed at 20%. The threshold is much lower than for stocks, where only gains in excess of 50 million won ($ 46,000) will be taxed.
For cryptocurrencies owned before the start of the tax regime, the authorities consider the higher of either the market price immediately before 2023 or the actual acquisition price.
The proposed tax regime was anticipated and postponed several times in 2020. Following lobbying work from local cryptocurrency advocates, implementation delayed to 2022. Now the government appears to have set the date in stone, although it is catching a further delay.
While the relative popularity of cryptocurrencies in Korea declined after the 2018 bear market, illustrated by Binance Korea that failed to establish itself, it remains a stronghold of cryptocurrency adoption.
The Korean government pushed for a variety of blockchain-based initiatives in the fields of digital identity and blockchain voting. It also designated the large population center of Busan a “blockchain city,” although some reports suggest the categorization lacks content.
At the same time, the government has taken a particularly strong stance on certain categories of cryptocurrency many local exchanges need to take out privacy coins. It also housed executives from the large local Bithumb stock exchange investigation for alleged fraud.