South Korea has postponed its new virtual asset tax regulations until January 2025, providing relief to cryptocurrency investors. Initially set for early 2023, the delay aims to address concerns about individual tax burdens and clarify regulatory details.
Income from crypto investments, categorized as “other income subject to separate taxation,” will not impact personal tax credits.
The postponed rules include various taxes such as gift tax for residents, income tax for individuals, withholding tax for non-residents and foreign companies, and corporate tax for local corporations. The delay mainly affects income tax on resident individuals and withholding taxes on non-residents and foreign companies.
Current laws subject gifts of virtual assets to gift tax, with asset values averaged around the gift date. There’s debate over whether NFTs should be considered virtual assets, but they are likely subject to gift tax.
Income tax on virtual asset transfers has also been deferred to January 2025, when non-residents and foreign corporations will face withholding tax on transactions. The Corporate Tax Act remains unchanged, taxing income that increases a corporation’s net worth.
The delay offers time for refining regulations, aiming for a smoother transition by 2025, and is seen as a positive development for investors.
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