South Korea's National Assembly Finance Committee identified cryptocurrency taxation as a major policy issue in its second-half agenda, releasing a policy report on January 7. The committee faces two opposing bills: the People Power Party's proposal to abolish digital asset taxation and the Democratic Party's proposal to raise the tax exemption threshold to 50 million won. Under current Income Tax Act provisions, cryptocurrency taxation is scheduled to begin on January 1, 2027, with a 2.5 million won basic exemption and a 20% separate tax rate (22% including local taxes). The implementation has been delayed three times since the original January 1, 2022 start date due to infrastructure concerns.
National Assembly Finance Committee Releases Cryptocurrency Tax Policy Report
The National Assembly Finance Committee published its "22nd National Assembly Second Half Policy Data Collection" on January 7. The committee stated the report "summarizes recent policy issues in tax and fiscal legislation under our committee's jurisdiction, organizing the current status and major issues for each topic, and compiling important considerations for policy direction and legislative discussion processes."
Digital asset income taxation appeared as the first issue in the tax legislation section. Three bills related to digital asset income tax are currently pending in the Finance Committee.
Three Pending Bills Present Opposing Taxation Approaches
People Power Party Representative Song Eon-seok proposed an Income Tax Act amendment to abolish digital asset income taxation. The bill cites three reasons for abolition: maintaining equity with the abolished financial investment income tax, addressing double taxation concerns as value-added tax already applies to trading fees, and acknowledging difficulties in taxing foreigners and overseas exchanges.
Democratic Party Representative Jeong Tae-ho proposed an Income Tax Act amendment to raise the basic exemption amount for digital asset income to 50 million won. This bill was originally introduced in 2024 but remained pending after taxation was postponed. In 2024, the Democratic Party opposed the People Power Party and government's tax postponement, presenting the 50 million won exemption increase as an alternative.
Additionally, Representative Song Eon-seok proposed an Income Tax Act amendment to postpone taxation implementation to 2028, and a public consent petition demanding tax abolition remains pending.
Policy Debates Center on Three Core Issues
The cryptocurrency taxation abolition debate divides into three main points. First, opinions clash between those arguing digital asset income tax should be abolished for equity with the abolished financial investment tax, and those maintaining taxation should proceed according to the basic principle of "taxing where there is income."
Second, some argue income tax constitutes double taxation since value-added tax already applies to digital asset brokerage fees. The government maintains "value-added tax applies to services, not income, so there is no double taxation issue."
Third, concerns exist about blind spots in overseas transactions and inadequate infrastructure. The government's position states the Common Reporting Standard for Crypto-Assets (CARF) will be implemented in 2027, making taxation feasible. Regarding additional postponement after three delays since 2022, arguments favor postponement to allow infrastructure construction time, while opposing views emphasize policy credibility and global alignment.
Regarding exemption threshold increases, supporters cite that the basic exemption amount was 50 million won before financial investment tax abolition, younger investors participate more heavily in cryptocurrency markets, and a soft landing for tax implementation is necessary. Opponents argue the policy support rationale is weaker compared to domestic listed stocks, and the current 2.5 million won threshold should be maintained considering the 2.5 million won basic exemption for overseas stock capital gains.
FAQ
When is South Korea's cryptocurrency taxation scheduled to begin?
Cryptocurrency taxation in South Korea is scheduled to begin on January 1, 2027, under current Income Tax Act provisions. The tax will apply a 2.5 million won basic exemption and a 20% separate tax rate (22% including local taxes). The original implementation date was January 1, 2022, but has been delayed three times due to infrastructure concerns.
What are the two main legislative proposals on cryptocurrency taxation?
The National Assembly Finance Committee has two opposing bills pending. People Power Party Representative Song Eon-seok proposed abolishing digital asset income taxation, citing equity with abolished financial investment tax, double taxation concerns with VAT on trading fees, and difficulties taxing foreign transactions. Democratic Party Representative Jeong Tae-ho proposed raising the basic tax exemption from 2.5 million won to 50 million won.
What are the government's responses to double taxation and infrastructure concerns?
The government states that value-added tax on brokerage fees applies to services, not income, so no double taxation issue exists. Regarding infrastructure readiness for taxing overseas transactions, the government maintains the Common Reporting Standard for Crypto-Assets (CARF) will be implemented in 2027, making taxation feasible without additional delays.
