The ruling party of South Korea, the People’s Power Party, is leading a campaign to extend the tax on the gains made in cryptocurrency for two more years as it promised during its campaigns before the general election this April. Herald Business Daily reported that the party wants to push forward digital currency asset taxation as part of its election agenda while preparing a stable tax system by the 22nd National Assembly.
Rationale and Framework for Crypto Taxation
This comes in response to the previous postponement of online assets impositions by the government and the National Assembly until 2025 January but there are now plans to continue this deferment further. People Power Party argues that there should only be taxing after constructing strong taxation infrastructure for crypto assets and has stressed on ‘’taxation after selection fee” principle.
The People Power Party is considering the possibility of delaying virtual asset taxation in an attempt to draw parallels with the tax overhaul made by the Yoon Seok-yeol government regarding financial investment and stock transfer taxes. A key part of this proposal is the plan for the second stage of the “Virtual Asset User Protection Act,” which will seek to outline what constitutes a deposit management business, establish a legal listing regime, as well as create a virtual asset exchange.
Whereas the first phase of the Virtual Asset User Protection Act was mainly focused on investor protection and penalties; PPP intends to extend it with regulatory oversight and imposition of levies. One party official emphasized a full-fledged taxation regime before taxing digital property on different grounds like transaction monitoring and discrepancies in income reporting.
However, the party is confident that it can implement its proposed tax deferral strategy despite recognizing the government’s past oversight of the crypto asset market. Nevertheless, the report suggests that there isn’t an intention to abolish taxation on virtual assets. The party thinks it would be unfair to ignore taxes payable on income from virtual assets.
Moreover, there are also talks happening about changing the tax base, especially regarding the difference between taxation exemptions on shares and virtual assets. Tax policies should be balanced according to the People Power Party and the whole taxation process made comprehensive to handle intricacies in crypto asset operations.
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