South Korea's government signaled it is leaning toward another delay in taxing cryptocurrency gains, as concerns mount that preparations are not ready for the levy set to take effect in January.
Lee Hyoung-il, deputy prime minister and minister of finance and economy, was asked at a parliamentary audit of the National Assembly's Finance and Economy Committee on the 22nd whether the tax could be postponed again. "At the last audit, I told you, after being pressed by several lawmakers, that I would listen more to experts and the industry before deciding," he said. "I will gather all the views from the industry and from the National Assembly and weigh them as carefully as possible."
Lee said a recent meeting between First Vice Minister Kwon Dae-young and the crypto industry was part of that process. Kwon told the audit that the tax, introduced in 2020, was designed around spot trading. "We confirmed again at the meeting that there have been considerable changes since then, including advances in technology," he said.
Financial Services Commission Chairman Lee Eok-won also took a cautious line. Asked at a parliamentary audit of the National Policy Committee by Song Eon-seog of the People Power Party whether the tax should be scrapped or delayed, Lee said, "I think various circumstances need to be fully taken into account." On calls to enact a framework act on digital assets before taxation begins, he said talks are "in the final stage" and pledged to move discussions forward as quickly as possible.
The National Tax Service, meanwhile, is proceeding with rulemaking on the assumption that the tax starts in January. According to a progress report the agency submitted to the committee, it plans to finalize a draft rule by the end of this month and request a preliminary review on the 6th of next month, with the aim of issuing the rule during November.
The problem is how little time is left. Lim Yi-ja of the People Power Party said even the largest crypto service providers need at least six to nine months to build systems in line with the tax agency's rule, leaving too little time before the levy takes effect.
Another challenge is the difficulty of obtaining transaction records from overseas exchanges and decentralized exchanges. "Apart from trades on domestic exchanges, it is true that we cannot secure 100% of the data from DEXs and overseas exchanges," Park Hae-young, deputy commissioner of the National Tax Service, told the audit. "Realistically, other countries are in a similar situation." He said the agency would make the fullest possible use of the Crypto-Asset Reporting Framework and filings on overseas financial accounts. The agency plans to complete an integrated analysis system by the end of this year.
Some lawmakers opposed another postponement. Yoon Hou-duck of the Democratic Party of Korea said the government had promised to get ready each time the tax was deferred and was now repeating the same line, warning that repeatedly delaying a law passed by the National Assembly could undermine trust in policy. Lee Hyoung-il said he would take that concern into consideration as well.