Potential candidates for the presidency of South Korea are in favor of postponing the introduction of a tax on income from cryptocurrencies in order to attract the electorate of generations Y and Z.
The ruling Democratic Party and a number of opposition parties in South Korea have opposed the law on taxation of income from cryptocurrencies, which will take effect from January 2022. Lee Jae-Myung, the Democratic presidential candidate, said in May that the cryptocurrency tax should be introduced one year after the election.
His opponent Hong Jun-Pyo, who intends to run for president from the Conservative Party, criticized the tax policy, calling it insensitive, and said the tax would lead to the regression of the industry. Four more parties have put forward proposals to abolish the taxation of income from cryptocurrencies.
This decision is probably dictated by the fact that investors between the ages of 20 and 30 are opposed to income tax on cryptocurrencies. Generations Y and Z have more cryptocurrency capital than older generations, and taxation will have a major impact on their financial well-being.
According to the Financial Services Commission, the number of cryptocurrency investors between the ages of 20 and 30 represents almost 60% of the total number of investors on the four major exchanges in South Korea as of Q1 2021. Therefore, the political agenda for taxing income from cryptocurrencies is becoming an important variable in the upcoming elections.
Cha Dong-jun, professor in the Department of Tax and Taxation at Kyungbok University, believes news of the upcoming presidential election in March 2022 influenced the comments and suggestions of legislators. In his opinion, the National Assembly will consider the proposed bills to defer the introduction of income tax on cryptocurrencies in December 2021, which coincides with the pre-election season.
“I think there is a good chance that the tax legislation will be canceled. Both parties will not risk losing their votes, ”said Cha Dong Chung.
Note that 20% income tax on cryptocurrencies over 2.5 million won (about $ 2,105) will be introduced from January 1, 2022, and 20% tax on equity capital gains from 50 million ($ 42,100) – only from January 1, 2023. Outraged investors sent two petitions to the government, but they were rejected. Curiously, South Korea’s NFT income will not be taxed.