The Strategy and Finance Committee of the South Korean National Assembly has proposed to postpone the introduction of income tax on cryptocurrency transactions until January 2022, local news outlet DongA reported today.
Per the report, the authorities originally planned to introduce the tax in October 2021. The delay was caused by local cryptocurrency exchanges needing more time to create an effective tax infrastructure.
Currently, South Korean crypto exchanges are obliged to complete the know-your-customer procedures for their clients by September 2021 as part of the implementation of the law “On Special Payments.” The amendments also include a ban on anonymous cryptocurrencies.
According to a research report published by crypto analytics platform Chainalysis yesterday, South Korea has one of the most thriving crypto markets in the world.
"South Korea has one of the most active cryptocurrency economies in the world, ranking 7th worldwide on our Global Crypto Adoption Index and 2nd in East Asia. Overall, South Korea ranks 3rd in total cryptocurrency received," said Chainalysis.
We teamed up with @XangleOfficial to research the South Korean cryptocurrency market and our report is out now! Click below to see the whole thing and keep reading this thread for a few highlights. https://t.co/POBstNoHgA
— Chainalysis (@chainalysis) November 24, 2020
As Decrypt reported previously, the Ministry of Strategy and Finance proposed a tax on profits made via crypto-to-fiat transactions in mid-May. This proposal also included tokens sold by crypto mining organizations and through initial coin offerings (ICOs).
In July, South Korea's Deputy Minister of Finance also proposed a flat 20% tax on profits from crypto deals that exceed 2.5 million won (roughly $2,200) annually. Unlike the earlier proposal, this one encompassed all crypto-related trades—and not only those that involve fiat.
“The financial authorities should think twice before imposing taxes on the market, as the digital currency industry is still in its infancy,” said Yonsei University economist Sung Tae-Yoon at the time, adding, “Any rash taxation or introduction of regulations can be a stumbling block for sustainable growth of the industry.”
At least this stumbling block may be delayed for some time.