‘2030 Anger’ Over Cryptocurrency Taxation... Embarrassed Ministry of Economy and Finance

[Sejong=Asia Economy Reporter Son Seonhee] The government’s plan to tax investment profits from virtual assets (cryptocurrencies) starting next year is facing strong resistance, especially from the 2030 generation. With political parties also aligning with this stance ahead of the presidential election, the Ministry of Economy and Finance, which oversees tax policy, finds itself in a difficult position.

On the 27th, multiple petitions related to cryptocurrencies were posted on the Blue House’s national petition website, among which the petition titled “Do not discriminate in taxation” had garnered the most support, surpassing 51,200 signatures as of 9:30 a.m. Unlike stocks, which are taxed only on income exceeding 50 million won starting in 2023, cryptocurrency taxes will be imposed immediately from next year with a basic deduction amount of only 2.5 million won, causing dissatisfaction. For stocks, both loss offsetting and carryforward deductions are applied for five years. In other words, if there is a loss in a given year, it can be offset against gains for the following five years when calculating taxes. However, cryptocurrency investors view their assets as similar to stocks and perceive this as discriminatory taxation.

Another petition stated, “It is not right to impose taxes before establishing a system related to cryptocurrencies,” demanding a postponement of the tax application date and an increase in the basic deduction amount. This petition also received over 48,000 signatures as of the same time.

Cryptocurrency investors are known to be predominantly young people represented by the 2030 generation. As the controversy over cryptocurrency taxation spreads mainly among young people ahead of the major political event of the presidential election in March next year, political circles responded immediately. The Democratic Party of Korea is reviewing the situation at the policy committee level and is considering establishing a special committee. Some within the ruling party have reportedly already suggested that a tax deferral on cryptocurrency investment income should be considered. The People Power Party also plans to launch a task force (TF) team to study virtual asset systems.

The Ministry of Economy and Finance is in a difficult position due to the petitions and political movements. The timing of cryptocurrency taxation was postponed once from October this year to January next year. The basic deduction amount (2.5 million won) was set to align with general assets, and the ministry’s position is that it is difficult to treat stock investments, which help corporate growth, and speculative virtual assets on the same level. However, as was the case last year when controversy arose over the criteria for major shareholders subject to stock capital gains tax, the possibility of changes in tax policy for political reasons influenced by public opinion cannot be ruled out.

This content was produced with the assistance of AI translation services.