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South Korea to Proceed with Virtual Asset Tax as Scheduled
🇰🇷 South Korea /Economy & Trade

South Korea to Proceed with Virtual Asset Tax as Scheduled

From Dong-A Ilbo · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • South Korean Deputy Prime Minister and Minister of Economy and Finance, Koo Yun-cheol, confirmed that virtual asset taxation will proceed as scheduled in January next year.
  • Despite calls from the financial investment industry to abolish or postpone the tax due to its perceived unfairness compared to domestic stocks, the government plans to implement it first and consider revisions later.
  • The tax will classify income from virtual assets like Bitcoin and Ethereum as 'other income,' with a 22% tax rate after deductions, and has been postponed three times already.

South Korea plans to proceed with its virtual asset tax as scheduled in January of next year, according to Koo Yun-cheol, the Deputy Prime Minister and Minister of Economy and Finance. This decision comes despite significant pressure from the financial investment sector, which argues that the tax is unfair compared to the tax treatment of domestic stocks and calls for its abolition or further postponement.

We plan to proceed with the taxation as scheduled for next year.

— Koo Yun-cheolConfirming the implementation of virtual asset taxation.

The government's stance is to implement the tax first and then consider supplementary measures if necessary. Koo Yun-cheol stated that the current tax deferral is set to expire at the end of this year, and the taxation will commence next year. He added that the government would explore necessary adjustments after the initial implementation.

We will implement it next year and pursue a direction of supplementing it if there are necessary parts.

— Koo Yun-cheolExplaining the government's approach to the virtual asset tax.

Under the new tax regime, income derived from virtual assets such as Bitcoin, Ethereum, and Tether after January 1st will be subject to a 22% tax rate, including local taxes. This income will be classified as 'other income,' similar to lottery winnings, after deducting necessary expenses and allowances. The tax was originally slated for implementation in January 2022 but has been deferred three times.

Virtual asset gains are classified as other income, and loss carry-forward is not allowed.

— Kim Sang-hoonRaising concerns about the current tax classification.

Concerns have been raised by lawmakers, such as Kim Sang-hoon of the People Power Party, regarding the classification of virtual asset gains as 'other income,' which does not allow for the carry-forward of losses. He pointed out that countries like the United States, the United Kingdom, and Australia treat such gains as capital gains, permitting loss carry-forwards. Koo Yun-cheol acknowledged these concerns, stating that the government would review the matter after the tax implementation, noting that classifying it as 'other income' also provides certain benefits. He also emphasized that a shift to a capital gains tax system would require a comprehensive review of the entire capital market, not just virtual assets.

We plan to review it if necessary after the tax is implemented.

— Koo Yun-cheolResponding to concerns about loss carry-forward.
DistantNews Editorial

Originally published by Dong-A Ilbo in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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