The proposed tax would have levied a 20% tax on crypto gains made in a one-year period over KRW 2.5 million (US$2,122), starting Jan. 1, 2022.
Lawmakers from both ruling and opposition parties are trying to appeal to voters in their 20s and 30s, who are more likely to be cryptocurrency investors and therefore against the proposed tax, ahead of the presidential election in March, local analysts have said.
It is common to see resistance from industry and investors over tax plans, Harold Kim, director of the Korea Blockchain Association (KBA), told CoinDesk. But it is “not common” to see lawmakers and financial authorities in dispute over proposed taxes, and to eventually have the plan postponed.
Many crypto investors, and the KBA director, have compared the planned tax for cryptocurrency gains to the proposed levies on stocks, and conclude that they were being treated unfairly.
Stocks investors would only pay taxes for gains over KRW 50 million (US$42,450), whereas crypto investors would have to start paying when they reach $2,122 in capital gains, Kim said. In addition, investors could carry over stock losses for five years but could not carry over crypto losses at all. On top of that, the virtual assets tax was set to come into effect a year ahead of the stock gains tax, according to the KBA director.