In a recent strategic move, the People Power Party (PPP) in South Korea has proposed a further two-year delay in the implementation of crypto taxation ahead of the upcoming general elections. This decision has sparked a discussion about the implications of pushing back taxation on virtual assets to January 2025.
The PPP’s decision to explore delaying the commencement of crypto taxation aligns with the government and legislative consensus to prioritize regulatory groundwork before enforcing taxation on virtual assets. The party argues that a solid regulatory system must be first established for cryptocurrency before taxation can be effectively implemented. This highlights the importance of creating a comprehensive framework to address the complexities of taxing virtual assets.
One of the key obstacles in effectively collecting tax on virtual assets is the lack of a regulated trading platform and the difficulties in income verification with crypto companies. These challenges make it necessary to delay taxation by at least two years to ensure that a robust system is in place to tackle these issues. The PPP’s focus on establishing a solid taxation foundation reflects the broader financial policy trends in the country.
The PPP plans to propose the second phase of the “Cryptocurrency User Protection Law” during the upcoming 22nd National Assembly to address the gaps identified in the first phase of the law. The proposed legislation will define custodial service providers, incorporate listing systems, and establish a crypto exchange, among other things. This indicates a move towards creating a comprehensive regulatory framework for the virtual asset market.
While the PPP is not considering completely abolishing crypto taxation, they are exploring adjustments to the taxation criteria to address criticisms of tax disparity between stocks and virtual assets. The proposal aims to harmonize the tax treatment of various asset growth strategies, recognizing the challenges in tracking investment amounts and returns for taxation purposes.
The decision to further delay crypto taxation in South Korea has significant implications for the virtual asset market and the regulatory framework surrounding cryptocurrency. By prioritizing regulatory groundwork and addressing challenges in tax collection, the PPP aims to establish a comprehensive system that can effectively manage the complexities of taxing virtual assets. This move reflects the party’s commitment to creating a fair and transparent environment for cryptocurrency trading in the country.
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