Tax reform bill passed in South Korea to defer tax on virtual currencies for two years

The South Korean government has decided to postpone the tax on virtual currencies, which was scheduled to come into force in January next year, for another two years, according to the News 1 report. Tax infrastructure, consumer protection, and fairness with other assets
The reason is that the overall system needs to be thoroughly reviewed and supplemented. On the 25th, Kim Bum of the Ministry of Strategy and Finance (equivalent to the Ministry of Finance in Japan) held a meeting at the Bank Hall in Jung-gu, Seoul.
The Tax System Development Deliberation Committee, chaired by First Vice Minister Seok, passed the "2024 Tax Law Amendment Bill," which included these contents.
The amendment includes a bill to introduce a cryptocurrency exchange next year, which is a major concern for the country's 6 million cryptocurrency investors.
The bill includes a proposal to delay the implementation of taxation on virtual currencies by two years to 2027. The tax system applies to virtual currency investments (transfers and loans) of over 2.5 million won (approximately 280,000 yen).
This is a proposed amendment to the Income Tax Act that would impose a 20% tax on income (22% including local taxes). If this law goes into effect, a person who invests 10 million won (approximately 1.1 million yen) in virtual currency in one year will be taxed.
), he or she would have to pay 22% of 7.5 million won (approximately $830,000), or 1.65 million won (approximately $180,000), in income tax.
Taxation of virtual currencies was originally scheduled to be introduced in December 2020 and take effect in 2021, but was postponed several times and the latest revision
The announcement of the draft bill has led to another delay. Jeong Jeong-hoon, head of the tax office at the Ministry of Strategy and Finance, said, "According to the basic principle that tax is levied where there is income, virtual currencies
"However, in relation to this, there are aspects such as consumer protection and transparency that need to be supplemented, so after much deliberation, we have decided to postpone the tax for two years," he said.
The proposed amendment also includes a system to supplement the method of calculating the acquisition price of virtual currency. This allows a certain percentage (up to 50%) of the transfer price to be used as the acquisition price when it is difficult to confirm the actual acquisition price.
The gist of the law is that it is permitted to control the amount of virtual currency. In cases where virtual currency is acquired without going through an official exchange, such as when it is acquired for the first time or when it is held for a long period in an individual's wallet, it is difficult to calculate the acquisition price.
This is the government's explanation. Jeong Jeong-hoon, head of the tax office, said, "The process of calculating the exact acquisition price can cause inconvenience to the public and lead to a waste of administrative resources, so we are supplementing it by allowing a certain ratio.
"The specific ratio will be stipulated in the Enforcement Ordinance," he said.