Melker Bengtsson
TL;DR
-
A public petition against South Korea's new crypto tax passed 50,000 signatures, forcing the relevant parliamentary committee to handle it
-
The tax would levy 22% on crypto gains over 2.5 million won, taking effect January 1st, 2027
-
Petitioners ask lawmakers to push the start date two years, to build tax infrastructure and offset unrealized losses
-
So far the government is steadfast: the tax takes effect as planned
In South Korea, the new crypto tax keeps getting petitioned by the public. The new tax would levy 22% on crypto gains over 2.5 million won, around $1,850. It’s set to take effect soon, on January 1st, 2027. South Korea’s public petition system forces the relevant parliamentary committee to handle any public petition with more than 50,000 signatories within 30 days. This is the second time this year the new crypto tax has been petitioned by the public. So far, the government is steadfast, the tax takes effect as planned.
Petition Asks to Push the Start Date to 2029
The petition, which was posted on August 21st, asks lawmakers to push the start date two years, to January 1st, 2029. It’s framed as a way to build the tax infrastructure, not as a way to avoid taxation. Petitioners claim that most investors in South Korea are sitting on unrealized losses. This means that the lack of a loss carryforward would make them unable to offset those losses in the future.
Additionally, they argue this could force investors to less secure offshore platforms. Places where South Korean enforcement has a hard time reaching.
Yet Another Blow for Domestic Exchanges
South Korean exchanges have had a rough time in the last six months, profits for Upbit’s parent company were down 80% year-over-year and Bithumb’s profits were down even more. The new rules could be yet another blow for the domestic exchanges. Those are the exchanges the government has jurisdiction over and where they can best protect the citizens’ interests.
And the petition isn’t unwarranted. A similar tax was planned on gains on stocks but was ultimately scrapped. The fair thing to do, they argue, would be to treat the crypto tax the same way.
The Tax Has Been Pushed Back Three Times Already
If the tax were to be pushed forward, it would be the fourth time. The tax was originally proposed to take effect back in 2022 and has been pushed three times already. In July, the South Korean deputy Prime Minister Koo Yun-cheol said:
We are pushing forward with the plan to tax cryptocurrency starting next year as scheduled.
A successful petition, such as this one, means the parliament has to examine it, nothing else. They’re not obligated to open up a discussion on the timing. But it adds to already existing political pressure on the bill. The South Korean main opposition party, the People Power Party, has been campaigning to scrap the tax altogether. Other opposition politicians want to wait until the OECD releases its cross-border reporting framework.
