South Korea, which is keen on currency speculation, will decide at the end of July when the virtual asset tax law will be implemented! Will it affect the market?

This site (120bTC.coM): In the tax system revision plan at the end of 2022, the Korean government decided to postpone the implementation of the virtual asset tax to January 2025. According to Korean media reports today (21st), South Korea’s Ministry of Finance has begun to review the virtual asset tax law and will decide whether to implement it as scheduled before announcing the “Tax Law Amendment” at the end of next month.

Earlier, South Korean Finance Minister and Vice Prime Minister Choi Sang-mok said in an interview at the Sejong Office of the Government on the 17th: We still have time before the tax law amendments are enacted, so we will consider (postponing the implementation of the virtual asset tax)

Virtual asset tax The system is not yet perfect

The virtual asset tax, which was originally scheduled to be implemented in 2022, has been postponed twice because the tax authorities and virtual asset exchange-related systems are not yet ready.

The main reason is that income derived from the transfer or trading of virtual assets is classified as other income tax. When the income exceeds 2.5 million won, the applicable tax rate is 22%. This policy has triggered controversy over "unfair taxation" because the tax exemption for stocks is as high as 50 million won, while the tax exemption for virtual assets is only 2.5 million won.

According to South Korea’s new financial policy launched in 2023, when the total income from investing in stocks, bonds, funds, and financial derivatives in a year does not exceed 300 million won, the tax rate is 20%, and the tax rate for investments exceeding 300 million won is 25%.

In addition, tax accountant Zheng Yanda said that the virtual asset tax itself is an unreasonable legislation: when a complete tax base for virtual asset tax has not yet been established, legislation is still imposed. In the process, the government failed to even come up with a tax estimate.

Zheng Yanda also predicted that the virtual asset tax will not be implemented smoothly in January 2025: it has been postponed twice, and the situation has not changed for more than three years. If this situation continues, the implementation in 2025 will also appear unclear.

Anonymity and decentralization are problems

On the other hand, Zheng Yanda pointed out that the anonymity and decentralization of virtual assets are the main obstacles to the implementation of virtual asset tax: The fatal flaw of current regulations is the impact on virtual assets The essential characteristics, namely "anonymity" and "decentralization", are not fully prepared to deal with the tax base, which is the main obstacle to the implementation of virtual asset tax.

Zheng Yanda also said that if virtual asset tax is to be implemented smoothly, investors’ identities and transaction details must be centrally managed: In order to find the source of tax, investors’ identities and transaction details must be centrally managed. When it comes to practical measures to close this gap, we can look forward to the implementation, stability, and success of the virtual asset tax.

Will it affect investors’ willingness after implementation?

Since the current tax law is not friendly to the tax exemption for cryptocurrencies, if the virtual asset tax law is really implemented, it may indeed affect investors’ willingness to trade cryptocurrencies, or cause more Koreans to choose to use gray means to transfer their money. Moving to overseas exchanges...the subsequent impact remains to be seen.

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