Over 2,800 Agree to 2-Year Postponement Petition in National Assembly Public Consent
Government and Ruling Party Support Delay, but Opposition Remains Divided... "Uncertainty Must Be Eliminated"
[Asia Economy Reporter Lee Jung-yoon] Investors are experiencing confusion as the proposal to postpone the implementation of virtual asset taxation for two more years beyond next year has failed to pass the National Assembly. Experts emphasize the importance of a swift decision by the political sphere.
According to the related industry on the 22nd, a petition titled 'Petition to Postpone Coin Taxation for 2 Years Like Financial Investment Tax' was registered in the National Assembly's People's Consent Petition the day before. The petitioner stated, "The government insists on postponing virtual asset taxation for two years, but currently, no agreement has been reached in the National Assembly," and added, "We hope that virtual asset taxation will be postponed for two years considering market conditions, and after improving the system such as enhancing transparency of the Digital Asset Exchange Joint Council (DAXA) and establishing investor protection measures, taxation will be reviewed."
As of 4:17 PM on the 21st, 2,800 people had agreed to the petition. Although it has not yet reached the required 50,000 signatures within 30 days to be accepted and referred to the relevant committees, encouragement to 'please agree' continues mainly within virtual asset-related communities.
Under the current Income Tax Act, those who earn more than 2.5 million KRW in a year by transferring or lending virtual assets must pay 20% tax. This taxation plan is scheduled to be implemented starting next year. However, the government announced in July that it plans to postpone the implementation of virtual asset taxation until January 2025, a two-year delay. The taxation plan was originally scheduled to be implemented this year but was postponed by one year. The main reason for the postponement is that a basic law for investor protection must be established first. There are also concerns that taxation should be implemented after strengthening the tax infrastructure, and that the cryptocurrency market is in a slump with virtual asset prices such as Bitcoin falling significantly, which could lead to strong tax resistance.
However, despite the government's stance, the related amendment bill including the postponement of virtual asset taxation has not been processed. The government submitted the amendment bill in September, but it is stuck in plenary session review.
The government and the ruling party maintain their position on postponement, but due to difficulties in reaching an agreement with the opposition party, only investors are left frustrated. Comments such as "Make a decision quickly, whether it's taxation or anything else" and "If coins are taxed, I might as well invest in stocks" have appeared in related communities.
The industry agrees that a clear signal regarding coin taxation is necessary. An industry official explained, "Even if taxation proceeds as planned, the actual reporting and payment will be in May 2024," adding, "Even if implemented next year, it is not expected to be impossible or cause major difficulties." He further added, "Whether coin taxation is implemented or not, it is desirable to make a quick decision to prevent confusion or worries among investors."
Another official said, "Taxation is part of the process of coins being recognized as formal assets, so the taxation plan does not only have drawbacks," and added, "However, since it is important to establish accurate standards and methods, the option to postpone implementation for two years is also viewed positively."
There were also criticisms that coin taxation is becoming politicized. Professor Hong Ki-hoon of Hongik University’s Department of Business Administration said, "The political sphere is politicizing taxation while watching the eyes of coin investors," and criticized, "Eliminating regulatory uncertainty is important, but currently, the situation is rather maximizing it."
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