Officials from South Korea have caused confusion with contradictory announcements about a possible repeal of or amendment to the crypto tax that will be in effect in 2022.
The debate over whether or not to amend the crypto tax has intensified in South Korea’s National Assembly. The tax, if it is not changed, will levy a 20% income tax on crypto transactions exceeding 2.5 million Korean won. This amounts to approximately $2,100.
NFT regulations are the latest confusion about crypto assets in the country.
FSC officials declared that NFTs will not be subject to crypto tax on Nov. 5. This was based upon FATF guidelines which classify NFTs differently than cryptocurrency.
However, this decision was reversed yesterday by Do Gyu-sang, Vice Chairman of FSC:
“The Ministry of Strategy and Finance prepares tax provisions for NFTs, in accordance to the Special Reporting Act.”
The Special Reporting Act governs cryptocurrency taxation.
Many are skeptical that the government is looking out for the best interests the crypto industry, as the official policy direction changes so often. Nam Doo-wan, Stablenode’s founder, tweeted today: “Korean gov. We might flip our position, but you crypto heads won’t be slapped until that happens.”
Since April 2021, many proposals from the Democratic Party to delay the tax, which has a majority in parliament, gained momentum at National Assembly, until Hong Nam-ki, the opposition People’s Power Party Finance Minister, stopped them. Similar events occurred in September and will likely occur again before the end of 2019.
Although the conflict between the opposing parties is factual, there is also misinformation. News outlets incorrectly reported that the tax had been delayed. This confusion is caused by the non-Korean-speaking journalists who report on the issues.
Jun Hyuk Ahn is the Head of Communications at Vegax Holdings. He told Cointelegraph that the Democratic Party is trying, with presidential elections approaching next March, to win favor with the 20- to 30-year-old age group by delaying tax.
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Despite the fact that the FSC has demonstrated internal conflict regarding how to enforce the law as written, Ahn said that the National Assembly is the best place to modify the law.
The National Assembly’s partisan politics have hampered the ability to amend the law. Minister Hong has been challenged by The Democratic Party.