South Korea mulls over crypto tax abolition amid financial investment tax repeal

South Korea is currently deliberating on whether to include gains from cryptocurrency assets in the upcoming abolition of income tax on financial investments.

In a policy briefing earlier this week, Jeong Jung-hoon, the deputy minister of South Korea’s Ministry of Economy and Finance’s tax and customs office, suggested that the National Assembly, the country’s legislative body, should consider including gains from crypto assets in the proposed removal of income tax on financial investments.

Jeong’s remarks were in response to public inquiries about whether cryptocurrency taxation should be abolished along with taxes on financial investments, as reported by ZDNet on Jan. 17.

The current government, led by President Yoon Suk-yeol, is working towards eliminating taxes on financial investments like stocks and funds to promote wealth accumulation and sound financial planning among its citizens.

Scheduled to commence on Jan. 1, 2025, South Korea’s current crypto tax regime mandates a 22% tax on crypto asset gains exceeding 2.5 million Korean won ($1,865). Notably, taxation on financial investment income is also set to begin on the same date.

Jeong stated that the South Korean government is planning to propose a revision to its income tax law focusing on financial investment taxation, aiming for late January or early February, according to a local media report.

However, the National Assembly faces a tight deadline to deliberate and process these proposed amendments, with the national election scheduled for Apr. 10.

Meanwhile, South Korea’s stance on cryptocurrency ETFs remains firm despite the U.S. Securities and Exchange Commission’s recent approval of a Bitcoin spot ETF.

The South Korean government continues to prohibit the launch of cryptocurrency ETFs, maintaining its policy of not recognizing digital currencies as financial assets. This stance has been in place since 2017, preventing financial institutions from investing in cryptocurrencies.

Furthermore, starting Jan. 1, 2024, approximately 5,800 public officials in South Korea were required to disclose their financial holdings, including virtual assets, through the Public Ethics Transparency System. The move, announced by the Ministry of Personnel Management on Dec. 27, is aimed at enhancing transparency in public service and bolstering the public’s right to information.