Taking the current crypto market slump into consideration, the South Korean Government has reportedly decided to halt the taxation of virtual assets for the next two years. The development was reported by Newsis, a privately owned news agency in South Korea.
The Korean government initially had plans to introduce the new tax laws by January 1st, 2023. However, they have reportedly decided to wait till the crypto markets recover from the recent crash. The crypto tax laws are part of the “2022 Tax Reform Bill.” As per the new decision, taxation on crypto and virtual assets will come into effect on January 1st, 2025.
Why has South Korea pushed back its crypto tax dates?
Firstly, as mentioned above, the current market slump has hurt many investors. Additional taxes would only further disapprove the industry. The government has found the right idea in waiting for the markets to bounce back and tax investors once sentiments are up.
Additionally, according to the government, the absence of an investor protection mechanism served as justification for delaying taxation.
South Korea-based company Terraform Labs, has been at the center of this year’s crypto crash. South Korean authorities are currently investigating the firm. They have recently discovered a Terra subsidiary that was used to channel money from overseas.
The Digital Asset Framework Act is expected to roll into action in 2025 as taxation comes into effect. The South Korean government plans to cite the US virtual asset-related regulatory study, which will be issued in October, to help with its legislation.
Apart from South Korea, Germany too introduced laws that allow Bitcoin and Ethereum to be untaxed after one year of holding. The German Federal Ministry of Finance (also BMF) released a letter offering managers, individuals, and company owners. The letter is a comprehensive guide on the recognition and taxation of digital assets like Bitcoin (BTC), Ethereum, and others.