South Korea Extends Crypto Tax Deadline to 2027 Amid Investor Pushback
- South Korea delays cryptocurrency tax to 2027 to address investor concerns.
- 20% tax to apply on crypto gains exceeding 2.5M won when enacted.
- OECD framework to enhance tracking of overseas cryptocurrency transactions.
South Korea extends its crypto tax deadline to 2027 to address concerns about fair policies and global alignment. The 20% tax will target gains over 2.5M won, with international cooperation to improve oversight of overseas transactions.
South Korea Delays Crypto Tax to 2027 Amid Investor Concerns
South Korea has postponed its cryptocurrency capital gains tax to 2027 after an agreement between major political parties. The delay aims to address structural challenges in taxation and concerns raised by investors about market impact of the tax. The ruling Peoples Power Party (PPP) had suggested a longer delay but the parties agreed on a two-year extension.
The government emphasized the need for a proper strategy to ensure transparent and fair taxation without disrupting the crypto space. Policy makers are cautious to disrupt the sector which has seen daily crypto trading volumes exceed traditional stock markets. The decision comes after several delays since the tax was initially proposed in 2021.
Tax to Impose 20% on Gains Over 2.5M Won When Enacted
The proposed tax will impose a 20% tax on annual cryptocurrency gains that exceed 2.5 million won. The tax law which was initially scheduled for 2021 has been postponed several times because of political disagreements and public concerns. After its enactment, it will be a remarkable regulatory achievement for South Koreas virtual asset market.
However, stakeholders argue that the framework has no provisions for loss offsets and other practices that are available in traditional financial markets. Moreover, experts urge the government to change the tax policy to ensure fair treatment of cryptocurrency income. Additionally, there is a need for clearer guidelines on taxable events, acquisition costs and classification of incomes.
OECD Reporting Framework to Aid Overseas Transaction Tracking by 2027
South Korea plans to align its cryptocurrency tax enforcement with the OECDs Crypto Asset Reporting Framework by 2027. This system will facilitate the automatic exchange of data between 48 participating jurisdictions to improve the global transaction transparency. This step seeks to address enforcement gaps in tracking overseas cryptocurrency transactions.
South Korea currently relies on domestic exchanges for tax data but is limited to track foreign transactions. Lack of adequate oversight could lead to tax evasion and capital outflows, says experts. The government expects to bridge the tax gaps and establish a solid enforcement structure through international cooperation.
Other countries such as the United States taxes crypto as property with profits taxed as capital gains based on the holding duration. The United Kingdom also taxes cryptocurrency profits as capital gains and allows loss offsets. Germany provides tax exemptions for crypto held over a year to encourage investment stability. Meanwhile, Japan taxes cryptocurrency income as miscellaneous income, with no provisions for loss offsets but detailed guidelines for acquisition methods.
Read more: https://www.tronweekly.com/south-korea-postpones-crypto-tax-to-2027/
Text source: TronWeekly
