The main opposition Democratic Party of Korea (DPK) announced on Dec. 1 its agreement to postpone the controversial cryptocurrency tax by two years. The tax, introduced via a 2020 amendment to the Income Tax Act, was initially slated to take effect on Jan. 1, 2024. However, repeated delays, largely driven by investor opposition, have now pushed the implementation date to 2027. The ruling People Power Party (PPP) and the government had advocated for the deferral, citing the need for further preparation, while the DPK initially supported adhering to the original schedule with an increased deduction threshold. This shift in the DPK’s stance reflects growing concerns over the premature rollout of taxation policies without sufficient safeguards.
In a press briefing, DPK floor leader Rep. Park Chan-dae stated, “After extensive discussions, we believe additional institutional adjustments are needed for virtual asset taxation. We have therefore agreed to a two-year deferral.” The policy, established under the former Moon Jae-in administration, imposes a 22% tax on cryptocurrency gains exceeding a basic deduction of 2.5 million won ($1,786). The delay also aligns with the timeline for the global crypto tax data exchange system, which is scheduled to begin in 2027. The PPP, which had pushed for the postponement, cited the lack of a comprehensive taxation framework as a key concern.
The DPK’s reversal appears to address apprehensions about disproportionately impacting domestic investors and alienating younger cryptocurrency investors, particularly those in their 20s and 30s—a significant voter demographic. Previously, the DPK had suggested raising the deduction threshold to 50 million won while maintaining the original timeline, but the party ultimately opted for a broader delay.
The DPK’s decision also fits within a broader strategy by its leader, Lee Jae-myung, to appeal to centrist voters. Critics, however, have accused the party of political maneuvering, pointing to parallels with Lee’s recent decision to drop plans for implementing a financial investment income tax next year, despite internal support within the party.
DPK officials justified the delay by emphasizing fairness in tax enforcement. While domestic cryptocurrency transactions through local exchanges are traceable, those conducted via overseas platforms remain difficult to monitor, raising concerns over equity. “Under the international agreement, cross-border data exchanges will commence in 2027, and we agreed to postpone implementation until then,” a senior party official said.
Despite agreeing to the delay, the DPK maintained a firm stance against separate taxation of dividend income, which it described as a “tax cut for the ultra-wealthy.” Park reiterated, “We remain unwavering in our opposition to the government’s plans for separate taxation on dividend income.” Critics, however, accused the DPK of hypocrisy, highlighting its opposition to tax cuts for the wealthy while implementing policies seen by some as populist measures. Observers have noted potential inconsistencies in the party’s broader fiscal strategies. The PPP welcomed the decision, framing it as a victory for public sentiment.
PPP leader Han Dong-hoon commented on social media, “No political party can go against the will of the people. The postponement of cryptocurrency taxation, as proposed by the PPP, has been finalized.”
