The majority party in South Korea is pushing for the encryption tax law to be implemented next year. Why is the Democratic Party's revised version more favorable for coin speculation?

Just after reporting on the Russian Cryptocurrency Tax Amendment, South Korea's largest opposition party, the Democratic Party, has also announced that it will accelerate the implementation of the Cryptocurrency Tax Law (South Korea's political situation is showing a trend of small parties gaining power, with President Yoon Seok-yeol coming from the People's Power, and the opposition Democratic Party holding the majority of the parliamentary seats). In fact, South Korea originally planned to implement the amended Income Tax Law passed in 2020 on January 1, 2022, but the legislation has been postponed twice and is expected to be officially implemented next year. The regulation states that if the annual income from Cryptocurrency exceeds 2.5 million Korean won, a separate tax of 20% (including local taxes, a total of 22%) will be applied.

50% exchange得免稅，民主黨版本稅法改什麼？

According to local media reports, the Democratic Party confirmed that it will discuss a proposal to increase the tax deduction for Cryptocurrency to 50 million Korean won at the Finance Committee meeting on the 26th. However, in fact, some members of the party urged the government and the ruling party to delay the Cryptocurrency tax bill for the third time due to the growing opposition from investors, but the Democratic Party still decided to push for the implementation of the bill.

Last month, Democratic Party member Zheng Taihao's version of the income tax law amendment increased the deduction from below 25 million Korean won to below 500 million Korean won. Recently, it was confirmed that the Democratic Party decided to promote the version with a 500 million won deduction. In addition, the amendment also added a provision that if taxpayers have difficulty determining the actual cost of Crypto Assets, a certain percentage of the transaction amount (up to 50%) can be used as a substitute. This means that half of the exchanges can be tax-free, and now this provision has also been confirmed to be included in the government proposal.

Democratic Party: Increasing the deduction amount is equivalent to tax exemption for retail investors, encryption tax laws become a political struggle

Reports indicate that the Democratic Party plans to vote in the Taxation and Small Business Subcommittee of the Finance Committee on the 25th, and pass the amendment at the full meeting on the 26th. Mentioning the amendment inevitably brings up the previous cooperation of the Democratic Party with the government to abolish the capital gains tax (referred to as the capital gains tax).

However, the Democratic Party's position of abolishing the wealth tax but still accelerating the taxation of Cryptocurrency may provoke opposition from investors. However, the Democratic Party believes that expanding deductions is actually equivalent to canceling taxation, because the number of investors with annual income exceeding 50 million Korean won is small and the tax effect is minimal.

Officials from the Finance Committee explained, "The deduction amount is set at 50 million Korean won, calculated at a 5% rate of return, and the investment amount needs to be over 1 billion Korean won. As a result, the majority of investors will no longer be included in the taxable range, with only a few Large Investors affected."

(South Korea's top 1% account holds 70% of the total market investment, data revealing the mysterious veil of kimchi premium)

The Democratic Party stated that it will strive to reach a consensus with the ruling party, but if the ruling party insists on advancing the government's plan, the Democratic Party will take a tough stance and promote the implementation of the original proposal. Similar to the controversy over the Golden Investment Tax, the issue of taxing cryptocurrency has also become a battleground for the two parties. In response, Democratic Party officials said, 'If a protocol cannot be reached at the committee stage, according to the characteristics of the tax law as a subsidiary budget bill, it will be automatically submitted to the plenary session on the 2nd of next month. At that time, the Democratic Party can veto the bill and promote the implementation of the old law.'

This article Korean majority party promotes the encryption tax law next year, why is the Democratic Party version amendment more favorable for speculative traders? First appeared in Chain News ABMedia.