Subscribe
E-Paper
 |
| Rep. Kim Young-jin of the ruling Democratic Party of Korea, front left, bangs the gavel at the beginning of a subcommittee meeting under the Strategy and Finance Committee at the National Assembly in Yeouido, Seoul, Monday. Yonhap |
Revision to minimum amount deductible, date of tax imposition on agenda
By Lee Kyung-min
A subcommittee under the National Assembly Strategy and Finance Committee discussed whether to delay taxing gains from cryptocurrency trading, Monday.
High-ranking officials at the finance ministry and lawmakers of the ruling Democratic Party of Korea (DPK) and opposition parties sitting on the committee exchanged heated opinions during the much-anticipated government-legislative committee session, amid mounting public calls to postpone the taxation set to take effect next year.
At issue is whether to delay the date of imposition by at least one year and increase the minimum amount deductible significantly from the current 2.5 million won ($2,125).
Most adamant are people in their 20s and 30s who have invested heavily in digital assets. Both the ruling and opposition parties consider these younger people as crucial swing voters in the presidential election scheduled for next year.
The finance ministry says a 20 percent tax is inevitable on gains of over 2.5 million won made from cryptocurrency trading in a one-year period, since the previous plan to impose the tax starting Oct. 1 was already pushed back due to a lack of taxation infrastructure.
The ministry maintains that taxation on gains from cryptocurrency trading should take effect as planned, as reaffirmed repeatedly by Deputy Prime Minister and Finance Minister Hong Nam-ki whose stance is best summarized by the following statement: "There should be taxation where there is income."
However, the policy drive has yet to resolve concerns about how best to equitably identify taxable income, an issue raised mostly by opposition lawmakers who point out that it is impossible to track gains made in overseas crypto exchanges, unless holders of digital coins submit income tax filings.
The apparent loophole in the current tax administration is widely criticized by young crypto investors, serving as grounds for them to demand a more concrete, reasonable taxation scheme before rushing to collect tax revenue.
Young investors call into question Hong's claim that the taxation infrastructure is more than established, because measures to preserve and monitor user data on local crypto exchanges by using real-name accounts issued by domestic commercial lenders still falls short of identifying overseas trading.
The finance ministry is concerned about a delay to the taxation date despite its protest, a grim yet highly probable scenario since it has no authority to dismiss an agreed-upon revision reached by both ruling and opposition parties.
A revision bill pending at the National Assembly sponsored by 10 lawmakers seeks to raise the minimum deductible amount to 50 million won, the same amount granted to those who made gains in financial investments including stocks and funds that have at least 60 percent bought into stocks.
But the finance ministry says equating cryptocurrency trading with investments in publicly traded firms is inappropriate, since the latter bolster funding capabilities of listed firms for corporate growth, a function utterly lacked by digital coin trading. The government views coin trading as not warranting the same level of tax benefits, as it serves no purpose in spurring economic growth.
