Korea Blockchain Association "Welcomes Cryptocurrency Tax Deferral"

Expressing regret over the inability to change the income classification from existing other income

[Asia Economy Reporter Gong Byung-sun] The Korea Blockchain Association has expressed its welcome for the one-year postponement of the cryptocurrency taxation implementation date from the original schedule.

According to industry sources on the 3rd, the partial amendment to the Income Tax Act, which postpones the cryptocurrency taxation implementation date by one year from the original January 1 of next year, has passed the National Assembly plenary session. The bill passed the full meeting of the Planning and Finance Committee on the 30th of last month and was automatically submitted to the plenary session as a supplementary bill to the revenue budget bill. As a result, actual tax payments will begin in May 2024.

Last year, the government pushed for taxation on cryptocurrency transfer profits starting January 1 of next year through tax law revisions. However, concerns were raised that establishing a taxation infrastructure without the completion of the registration approval for virtual asset service providers under the Specific Financial Information Act, which came into effect in September this year, was an unreasonable attempt. Virtual asset service providers must have their business registration approved to gain the authority to collect users' personal information for extracting taxation data.

However, the association also expressed regret over the postponement of the proposal to change the income classification and increase the deduction limit from 2.5 million KRW to 50 million KRW. Currently, the government classifies cryptocurrency as other income and plans to impose a 20% tax on profits exceeding the basic deduction amount of 2.5 million KRW.

The deduction amount for stocks, funds, bonds, etc., classified as financial investment income, is 50 million KRW. Additionally, while stocks allow for a five-year carryforward of losses, cryptocurrencies do not receive such deductions, raising fairness issues according to the Korea Blockchain Association.

Oh Gap-su, chairman of the Korea Blockchain Association, said, "We welcome the passage of the bill postponing the taxation implementation date at the plenary session," adding, "The association and its members will do their best to cooperate with tax policies and contribute to national economic development by creating a stable taxation system during the extended postponement period."