South Korean government officials have created confusion this year with conflicting announcements about a possible repeal or modification of the upcoming cryptocurrency tax. which will enter into force in 2022.
Throughout 2021, the intensity of the debate has increased in the National Assembly, the legislative body of South Korea, on whether or not to modify crypto taxes. If left unchanged, the tax will levy 20% on revenue generated by crypto transactions that exceed 2.5 million Korean won, or about $ 2,100.
NFT regulations are the latest example of cryptoassets confusion in the country.
November 5, FSC officials definitively stated that NFTs would not be subject to the crypto tax, relying on the FATF guidelines that classify NFTs differently from cryptocurrencies.
However, that decision was reversed yesterday, when FSC Vice President Do Gyu-sang said:
“The Ministry of Strategy and Finance is preparing tax provisions for NFTs in accordance with the Special Information Law.”
The Special Information Law dictates the regulations for cryptocurrencies, including taxation.
Some are skeptical that the government has the best interests of the crypto industry in mind, as the direction of official policy seems to change course very frequently.. Nam Doo-wan from Stablenode tweeted Today: “Korean Government: ‘We Could Change Our Position, But You Cryptocurrency Leaders Will Be Slapped Until That Happens.’
Since April 2021, several proposals to delay the tax of the Democratic Party, which has a majority in the legislature, have gained momentum in the National Assembly until Finance Minister Hong Nam-ki of the opposition People’s Power Party canceled them. The same thing happened in September, and it is likely to happen again before the end of the year.
Although the conflict between the opposing parties is a fact, there is also an element of misinformation, since the media has inaccurately reported that the tax has been delayed. This is a source of confusion for stakeholders in the Korean cryptocurrency industry. and is exacerbated by non-Korean-speaking journalists reporting on these topics.
Jun Hyuk Ahn, Head of Communications at Vegax Holdings, told Cointelegraph: “Since the presidential elections will be held next March, the Democratic Party is trying to win the favor of the 20-30 age group by delaying the tax.”
Although the FSC has shown that there is an internal conflict as to how to apply the law as it is written, Ahn noted that “the power resides in the National Assembly to change the law.”
As a last resort, the ability to change the law has been hampered by partisan politics in the National Assembly, where the Democratic Party has had to confront Minister Hong.