South Korean lawmakers are expected to revisit their plan to tax cryptocurrencies after a petition to abolish the long-delayed framework exceeded the required number of signatories to be discussed in the National Assembly.
Over 50,000 Koreans Sign Crypto Tax Petition
As South Korean authorities prepare to implement the upcoming income tax law, a petition to block the cryptocurrency tax system has received overwhelming support from South Korean investors and some policymakers.
The “Petition to Abolish Virtual Asset Taxation” passed the signature requirement on May 21, just eight days after it was registered. Notably, a petition must collect 50,000 signatures within 30 days of its public release to be automatically referred to the National Assembly for examination.
As a reminder, crypto assets will be subject to an income tax rate of up to 22%, starting January 1, 2027, for profits above 2.5 million won per year. The South Korean government has proposed implementing the income tax law by January 2022, but the rule change has been postponed three times.
At the time of writing, the demand to abolish the government’s crypto taxation plans has gathered more than 53,000 signatures in the National Assembly’s public petition committee. The petition will therefore be examined by the Finance, Economy and Planning Committee, which will decide whether or not to refer it to the plenary committee.
The petition argued that with the recent removal of tax on financial investment income aimed at promoting capital market development, it is difficult to justify the imposition of separate taxation for crypto assets.
“There are strong concerns that current policies are excessively focused on regulating and securing tax revenues, while neglecting the consideration of industrial competitiveness and ensuring global market leadership,” the request states, adding that “if taxation is applied only with the aim of generating revenue in the short term, it could lead to greater losses in the long term, such as industrial contraction and capital and talent flight.”
He also criticized the push to implement taxation before measures such as short-selling regulation, listing reviews, investor protection funds and unfair trading monitoring systems were sufficiently established.
Therefore, the petitioner considers that the system of taxation of crypto assets requires “a fundamental revision rather than a simple addition or postponement”, noting that the current system will only lead to an increase in burdens for the public and a contraction of the sector. “It is now time for a new global discussion, including the possibility of abolition, rather than imposing taxation on virtual assets,” we can read.
However, previous reports suggest that the chances of abolishing or postponing the cryptocurrency tax plan are low, as parliamentary petitions rarely result in legislative changes and officials appear determined to implement it in 2027.
NTS prepares for implementation of Income Tax Law
Last month, the People Power Party (PPP) introduced a bill to amend the Income Tax Law to abolish taxation of crypto assets. In the amendment, PPP leader Song Eun-seok proposed removing all provisions governing the taxation of digital assets in the current version of the Income Tax Law.
As Bitcoinist reports, the bill claims that imposing a separate income tax on crypto assets raises concerns about the fairness and consistency of the tax system. Additionally, he cites guidelines from US financial regulators, which have classified most digital assets as commodities rather than securities.
Despite these efforts, the National Tax Service (NTS) recently announced that it has started preparations to implement the crypto asset taxation framework next year. In late April, Park Jeong-yeol, director of the Personal Tax Bureau of the National Tax Service, outlined the agency’s plan to secure trade data and establish a taxation system to ensure timely execution of global income tax.
The NTS is also accelerating the development of its tax infrastructure, including an AI-based system for tracking crypto investment gains, which the agency plans to launch broadly by the end of the year.
The total crypto market capitalization is at $2.54 trillion in the one-week chart. Source: TOTAL on TradingView
Featured image from Unsplash.com, chart from TradingView.com
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