The South Korean government has officially ruled out any further delay to its cryptocurrency tax. While the ruling People Power Party is pushing a bill to abolish the crypto tax, the Ministry of Economy and Finance, the country's tax policy authority, reaffirmed its plan to implement the tax in January next year.
Moon Kyung-ho, director of the income tax division at the Ministry of Economy and Finance, said at an "Emergency Review Forum on Virtual Asset Taxation" held at the National Assembly Members' Office Building in Yeouido, Seoul, on Tuesday, "We will implement the virtual asset tax in January next year as scheduled." It is the first time the ministry has publicly stated its position on whether the tax will go ahead.
Under the current Income Tax Act, income from the transfer or lending of virtual assets will be classified as other income and taxed from January 1, 2027. Income exceeding 2.5 million won ($1,800) per year will be subject to a combined rate of 22 percent, consisting of a 20 percent other-income tax and a 2 percent local income tax.
The government also signaled it would address complaints that the tax criteria remain unclear. "The National Tax Service is preparing related guidelines," Moon said. "The guidelines will be publicly disclosed within this year." The tax agency has held multiple meetings with the country's five major virtual asset service providers to coordinate detailed taxation standards, according to sources.
The ministry also directly rebutted the People Power Party's push for abolition. Song Eon-seok, the party's floor leader, had earlier introduced an amendment to the Income Tax Act to remove the provision on virtual asset income tax. He cited fairness concerns with stock taxation, double taxation issues, and insufficient infrastructure at the National Tax Service.
In response, Moon said, "Delaying or abolishing the tax would break fairness with wage earners and business income taxpayers." The government's view is that since corporations already pay corporate tax on their virtual asset investment gains, exempting only individuals would also be unfair.
He also stressed that the abolition of the financial investment income tax cannot serve as grounds for delaying the crypto tax. "The taxation framework for virtual assets was already institutionally established through the 2020 amendment to the Income Tax Act," Moon said. "The financial investment income tax is not a precondition for virtual asset taxation."
Standards for new types of income such as staking and airdrops will be set through National Tax Service guidelines. On concerns that it is difficult to track transactions on overseas exchanges, peer-to-peer (P2P) trades, and decentralized exchanges (DEX), the ministry said these could be addressed through the foreign financial account reporting system and the global Crypto-Asset Reporting Framework (CARF).
On the double taxation controversy, the government explained that income tax on capital gains from virtual asset trading and value-added tax (VAT) on exchange fees apply to different targets. VAT is not imposed on virtual assets themselves but on the brokerage service fees charged by exchanges, making it difficult to view the arrangement as double taxation.
"Virtual assets are subject to a 20 percent rate under separate taxation as other income, which in some respects is more favorable to taxpayers than comprehensive taxation," Moon said.
