South Korean MPs have finally overturned the government on its proposed crypto tax plans, ending a long saga that pitted lawmakers against the large crypto-skeptic administration of President Moon Jae-in.
The National Assembly revealed on December 3 that it had approved a delay to the controversial tax in a vote held in the evening of December 2. MPs had taken the matter into their own hands, defying the government by backing a private member’s bill calling for an amendment to the tax law.
Sisa Journal noted that the bill has bumped the “effective date of taxation” by “one year from January 1, 2022, to January 1, 2023.” But “actual tax payments,” the media outlet remarked, will not “begin until May 2024.”
Another, potentially more valuable Christmas gift was also forthcoming: MPs said they would use next year to discuss the matter of allowing traders to make carryover deductions on their tax bills and even raising the threshold for tax payment from the existing rate of USD 2,100 a year. Some MPs are keen to create parity with stock trading taxation regulations.
The South Korean blockchain consultant Mira Kim told Cryptonews.com:
“I can tell you that there will be quite a few very happy crypto traders celebrating this news over the weekend throughout the country.”
Sisa Journal quoted Oh Gap-su, the President of the Korea Blockchain Association, as saying:
“We welcome the [National Assembly’s] postponement of the implementation of taxation on cryptoassets. As the grace period has been extended, we will do our best to establish a stable system, cooperate with tax policy and contribute to national economic development.”
One commenter on the Sisa Journal article wrote, with no shortage of irony:
“Mr. Moon doesn’t know what to do about this issue, so he has decided to let the next administration deal with the problem [of crypto].”
This has been a long battle. Keenly aware of the unpopularity of the tax, which MPs had already been voted into law months ago, when it was bundled with other reforms to the Income Tax Act, politicians decided to move on the matter ahead of next year’s March general election.
After the tax was approved, the government was hit with a wave of disapproval, with petitions calling for the tax to be scrapped submitted to the presidential office, the Blue House.
The government and key regulators gave these a frosty reception, drawing ire from many crypto-keen younger voters. Opposition leaders leaped on the matter with glee: young voters have tended to vote for the ruling Democratic Party in recent years, and the main opposition People’s Power Party responded by calling for an end to the tax and forming a crypto taskforce.
Eventually, the Democratic Party leadership caved and joined calls for a delay to the tax, although the government continued to voice its displeasure right to the end. MPs clambered abroad the cause, leading to a “glut” of bills calling for a delay coming before National Assembly committees.
After a tireless campaign from the pro-crypto industry People’s Power Party MP Cho Myung-hee, MPs finally united behind a single bill, creating a “de facto” consensus in parliament ahead of the vote – leading media outlets to call the vote a “formality.”
The government remained defiant and bitterly opposed to the change right to the very end. But, ultimately, it was unable to turn back the tide of what became a rare National Assembly-wide consensus.
Per Sisa Journal, as well as iNews24, MPs were also aware of opposition from the crypto industry, and agreed that the tax was “premature,” as there was “no proper definition of cryptoassets” in South Korean law, no was there a “tax infrastructure or system in place.” Another reason, they claimed, was that “there is no institutional mechanism for cryptoassets to be properly protected like other asset classes.”
At the end of this battle, the real winners in the matter appear to be crypto traders.