South Korea’s virtual asset tax is once again approaching a key deadline. According to Yonhap News Agency, the South Korean government will convene executives from the five major exchanges—Upbit, Bithumb, Coinone, Digital X and GOPAX—as well as DAXA, on October 20 to hear their views. Under the current plan, income from transfers and lending would be taxed at 22% after a deduction of 2.5 million won. The tax has been postponed three times since it was proposed in 2020. The government is still proceeding with preparations according to the original timeline.
In my view, the three postponements should not be seen simply as political foot-dragging. They look more like implementation challenges stemming from the fact that the tax base has not been defined and the reporting infrastructure is not in place. The industry says standards for valuing staking, airdrops and DeFi transactions remain incomplete. Whether exchanges can make withholding and reporting systems work will also determine whether the tax can actually be collected. The biggest risk for a tax system is not the rate itself, but unclear rules that make reporting and withholding impossible.
For readers, this means that in the short term, expectations of a delay may provide some relief to market sentiment, but they do not change the risks of trading or holding assets. In the medium term, once detailed rules are finalized, exchange product design and user costs will both be affected. On that basis, if no concrete tax guidance is issued after the meeting, exchanges have not completed their withholding systems, and the government has not revised the timeline, another postponement is more likely than the tax taking effect on schedule.
The conditions to watch are straightforward: after the October 20 meeting, will the government publish actionable tax guidance? Will the five major exchanges disclose the progress of their withholding preparations? Will the government revise the timeline for introducing the tax next year? If any of these are missing, it would suggest that the “cycle of postponements” remains in place. The source material does not provide details of the rules, so confirmation will have to wait for further official information.
Source:
PANews (originally published 10-18 at 11:18 Beijing time)
https://www.panewslab.com/zh/articles/01a14d04-3021-70e4-9ff8-c2e75965a4a2
In my view, the three postponements should not be seen simply as political foot-dragging. They look more like implementation challenges stemming from the fact that the tax base has not been defined and the reporting infrastructure is not in place. The industry says standards for valuing staking, airdrops and DeFi transactions remain incomplete. Whether exchanges can make withholding and reporting systems work will also determine whether the tax can actually be collected. The biggest risk for a tax system is not the rate itself, but unclear rules that make reporting and withholding impossible.
For readers, this means that in the short term, expectations of a delay may provide some relief to market sentiment, but they do not change the risks of trading or holding assets. In the medium term, once detailed rules are finalized, exchange product design and user costs will both be affected. On that basis, if no concrete tax guidance is issued after the meeting, exchanges have not completed their withholding systems, and the government has not revised the timeline, another postponement is more likely than the tax taking effect on schedule.
The conditions to watch are straightforward: after the October 20 meeting, will the government publish actionable tax guidance? Will the five major exchanges disclose the progress of their withholding preparations? Will the government revise the timeline for introducing the tax next year? If any of these are missing, it would suggest that the “cycle of postponements” remains in place. The source material does not provide details of the rules, so confirmation will have to wait for further official information.
Source:
PANews (originally published 10-18 at 11:18 Beijing time)
https://www.panewslab.com/zh/articles/01a14d04-3021-70e4-9ff8-c2e75965a4a2