The implementation of legislation around cryptocurrencies is a delicate subject in all the countries which have gone through this stage. On the one hand is the intransigence of authorities concerned with controlling an activity that has long eluded them, and on the other hand, investors who want more time to prepare. This showdown resulted in a more or less satisfactory compromise for the second part in South Korea. Indeed, the country has decided to postpone the entry into force of the new cryptocurrency legislation for another three months.
The decisive lobbying of the Korean Blockchain Association
Last July, the country adopted a tax law governing cryptocurrency-related activities. This indeed provides a 20% tax on any profit the value of which is at least 2.5 million won ($ 2,260) per year. Prior to this measure, these assets were not taxable because they were treated as currencies. Scheduled to come into force in less than a year, i.e. in October 2021, this law was the subject of strong reactions within the local community. The latter also made her complaints known through the Korean Blockchain Association. In particular, she pointed out to the authorities that the adaptation period between the new law and the old one was too short.
The association therefore asked an additional window of 15 months, i.e. until January 2022 to prepare to exist within this new tax infrastructure. Reluctant at first, the South Korean authorities eventually gave in to lobbying from the Korean Blockchain Association without releasing the pressure. Ultimately, crypto-exchanges and other structures operating in the sector will be entitled to a three-month extension period. The country’s National Assembly has in fact agreed to delay the implementation of the new tax law until January 1, 2022.
Korean Blockchain Association agrees with tax principle
As the main point of contention between the two parties has been agreed, the course of events should be peaceful. Indeed, the Korean Blockchain Association had issued a favorable opinion on the content of the new law. In the wake of its adoption, the association informed its representative that the industry was in full agreement with the principle of taxation of income from virtual assets and that it will actively cooperate.
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The South Korean authorities have just shown a capacity for listening and flexibility that is rarely seen in other countries in such circumstances, especially when it comes to cryptocurrencies. It is now up to the players in the sector to keep pace to perpetuate this climate of trust which will only be beneficial to cryptographic activities in the country.