Opposition party agrees on delay of crypto tax

Democratic Party of Korea's floor leader Rep. Park Chan-dae, second from right, speaks during a press conference at the National Assembly in Seoul, Sunday. Yonhap

The main opposition Democratic Party of Korea (DPK) agreed on Sunday to delay the controversial crypto tax for two years following investor backlash.

The decision comes a month after the party scrapped the financial investment income tax for similar reasons.

"After extensive discussions, we concluded that additional institutional arrangements are necessary for the virtual asset taxation," DPK floor leader Rep. Park Chan-dae said during the press meeting at the National Assembly. "We have agreed to defer taxation for two years."

Regarding the specifics of the internal negotiations, Park said, "The decision was made following prolonged deliberation, debate and political judgment."

Starting next year, the government had planned to impose a 22 percent tax, including local taxes, on annual income exceeding 2.5 million won ($1,790) from virtual asset investments. Although the policy had already been postponed twice, the DPK initially intended to implement the taxation plan by raising the tax exemption threshold to 50 million won.

However, growing backlash from the increasing number of crypto investors and opposition from the ruling People Power Party (PPP) led the party to agree to an additional postponement.

The ruling party welcomed the decision. PPP leader Han Dong-hoon said in a Facebook post the decision is a "good outcome for young people," adding, "no politics can prevail against the will of the people."

The PPP had pushed to abolish the law, arguing that supporting young people in building their assets was more important.

This marks the second time the DPK has reversed its stance on taxation following investor opposition. The party already scrapped plans to introduce the financial investment income tax on Nov. 4, citing the "challenging domestic stock market."

The amendment to the Income Tax Act, which includes the deferment of virtual asset taxation and the abolishment of financial investment income tax, will accordingly be approved at the Assembly's plenary session on Monday.