South Korea's Ruling Party Commits to Crypto Tax Plan for 2025 with Higher Exemptions

South Korea’s Democratic Party of Korea (DPK) is moving forward with its long-delayed plan to tax cryptocurrency gains starting January 2025, resisting calls for further postponements, according to a report from Seoul Shinmun.

Initially set to begin on January 1, 2022, the 20% tax (22% including local tax) on crypto gains faced significant backlash, leading to two delays. Despite proposals to push implementation as far back as 2028, the ruling party now aims to proceed with the 2025 timeline, emphasizing the importance of maintaining its commitment to tax reform.

In a bid to address investor concerns, the DPK has proposed significant amendments. The tax-exempt threshold for crypto gains will be raised from 2.5 million Korean won ($1,795) to 50 million won ($35,919). This adjustment aims to accommodate smaller investors, effectively exempting a majority of traders from the tax. Party representatives noted that with this elevated exemption limit, only a limited number of investors would be subject to taxation.

The updated proposal also introduces a provision to simplify tax calculations for investors. Given the challenges in tracking acquisition costs in the volatile cryptocurrency market, taxpayers would be allowed to use a percentage of the sale price as a stand-in for the original purchase price when precise records are unavailable.

The Democratic Party plans to bring the revised tax proposal to a vote in the National Assembly’s tax subcommittee on November 25, followed by a general vote on November 26. If passed, the new framework will mark a significant milestone in South Korea's regulatory approach to digital assets.