[비즈한국] With about four months left until the implementation of virtual asset taxation, controversy is intensifying. Although the government maintains its position to push forward with taxation starting January 2027 despite the backlash, the industry is calling for a reconsideration, citing unclear criteria for calculating income by transaction type and the lack of a computer system to connect the National Tax Service with businesses. Some also point out that it is disadvantageous compared to general financial investments. With opposition parties proposing consecutive bills to delay the implementation, attention is focused on whether virtual asset taxation will proceed as scheduled.
According to the revised Income Tax Act, starting January 1, 2027, virtual asset income generated from transfers or rentals will be taxed separately as other income. The basic deduction is 2.5 million KRW per year, and a total tax rate of 22%—including 20% income tax and 2% local income tax—will be applied to net profits exceeding this amount. Net profit is calculated by subtracting losses incurred over the year and costs associated with transactions from the total gains. Even users of overseas exchanges are subject to taxation if they have a residential address in Korea.
This tax is being implemented after being delayed three times in 2021, 2022, and 2024, yet opposition continues. Recently, the Digital Asset eXchange Alliance (DAXA), consisting of five won-market exchanges (Upbit, Bithumb, Korbit, Coinone, and Gopax), prepared an opinion paper on virtual asset income taxation. The paper reportedly requests a reconsideration of the implementation timeline based on reasons such as: insufficient infrastructure for virtual asset service providers, methods for calculating acquisition costs, difficulties in exchanging information with overseas exchanges, and ambiguous criteria for the timing of taxation.
Similar concerns were raised at the first debate on the virtual asset tax system held by the ruling party on September 3. Rep. Moon Jin-seok of the Democratic Party of Korea, who hosted the debate, remarked in his welcome speech, “Despite multiple delays, there is an assessment that significant improvements have not been achieved in the infrastructure or practical tax systems pointed out in the field,” adding, “This is why disagreements still persist regarding the justification for taxation, cautious views, implementation timing, and detailed measures.” As the government pushes for taxation despite industry backlash, even the ruling party is voicing the need for improvements.
Professor Park Jong-soo of Korea University School of Law (President of the Korean Association of Tax Law), who served as a presenter at the debate, noted that it is difficult to properly capture or calculate income based on virtual asset transaction types under the current Income Tax Act. Professor Park pointed out, “Taxation requirements should be re-examined based on transaction functions rather than assets. Before implementing the system, it must be clarified when and in what way the tax criteria for each transaction type will be specified,” suggesting a redesign of the virtual asset tax system.
Virtual asset transaction types are broadly categorized into: △buying/selling/exchanging/paying, △mining (performing computations), △staking, △lending, △depositing, △liquidity provision (paying fees in exchange for asset deposits), △airdrops (event-based distribution), and △hard forks (issuing new coins after network changes). Depending on the transaction type, the methods for generating revenue—such as realizing price increases, block rewards, distribution of operating profits, transaction fees, and agreed-upon rewards—also differ.
Professor Park viewed that, among these, airdrops and hard forks do not constitute a transfer or rental under the Income Tax Act. Furthermore, he pointed out that it is difficult to collectively tax them as other income because the criteria for mining (at the receipt stage), staking (by transaction type), and liquidity provision (in income classification) are not clear.
Equity issues were also raised, noting that the tax burden on virtual asset investment is greater than that of general financial investments. With the abolition of the financial investment income tax, domestic listed stock transactions are, in principle, tax-exempt. Capital gains tax is imposed on overseas stock transactions, derivatives, and major shareholders of domestic listed companies. However, for virtual assets, anyone with a net profit exceeding 2.5 million KRW is subject to taxation regardless of the investment scale, meaning even small investors will bear the tax burden.
The exclusion of virtual asset losses from loss carry-forward deductions also became a point of contention. Virtual assets are highly volatile, and in a sluggish market, investors often find themselves "trapped" for long periods. If an investor suffers losses across their entire portfolio but their annual profit exceeds 2.5 million KRW, they must pay tax. For example, if a 20-million KRW investment drops to 10 million KRW, but recovers to 13 million KRW the following year, the investor must pay tax on the 500,000 KRW (3 million KRW profit minus the 2.5 million KRW basic deduction), despite an overall loss of 7 million KRW.
While the exclusion of loss carry-forwards is a standard applied to stock investments, the virtual asset industry is demanding the same conditions that were included when the financial investment tax was initially proposed, which included a provision allowing for a five-year loss carry-forward.
Meanwhile, virtual asset businesses are struggling with practical issues such as labor and infrastructure shortages with little time left to prepare. Since there is no standard computer system connecting the National Tax Service to virtual asset businesses, each company has to build its own, facing different and complex data structures, which they are currently struggling to address.
A representative from a virtual asset firm expressed concern, stating, “Even if we build a linkage system with the National Tax Service by the end of the year, a testing period is required. We need to find and fix problems through testing, but it is realistically difficult to complete in the remaining time.” They added, “Since existing financial systems and technical standards are different, we need time to ensure safety. Won’t the companies be held responsible if problems arise later?”
The official continued, “There is a significant fear that investors will leave due to the implementation of the tax, which will deal a blow to the virtual asset market as a whole. The liquidity of the domestic virtual asset market itself will decline.” They added, “We are not saying not to tax. We are saying let’s implement it at a timing that fits the market situation and flow.”
Meanwhile, the opposition party is introducing amendments to the Income Tax Act to delay virtual asset taxation. On August 28, Rep. Kim Sang-hoon of the People Power Party and others proposed a bill to delay the implementation of virtual asset taxation by two years, from 2027 to 2029. Previously, on August 10, Rep. Jung Sung-kook of the People Power Party and others proposed a partial amendment to the Income Tax Act to delay the taxation start date to 2030, a three-year delay. Both bills are currently pending review by the Strategy and Finance Committee.