The government and the ruling party are actively considering a plan to postpone the taxation on virtual asset income, originally scheduled to take effect next year, by three years. On the 14th, Representative Song Eon-seok of the People Power Party proposed an amendment to the Income Tax Act, which would delay the taxation on virtual asset income from January 1, 2025, to January 1, 2028. According to the amendment, the regulation imposing a 20% tax rate (22% including local tax) on virtual asset income exceeding 2.5 million KRW annually would be postponed by three years.
The National Assembly had previously introduced taxation on virtual asset income in 2020, initially setting the taxation start date for 2022, which was then postponed to 2023 and later to 2025. Representative Song pointed out, “With the deduction amount for virtual asset income being only 2.5 million KRW, most investors are expected to be subject to taxation, which could lead to market contraction. Hastily implementing taxation without thorough preparation could cause market confusion and harm investors.”
The Ministry of Economy and Finance is considering including the postponement of virtual asset taxation in the tax law amendment to be announced at the end of this month. Former Democratic Party representative Lee Jae-myung has also mentioned the possibility of postponing the financial investment income tax, discussing the option of deferring the virtual asset tax simultaneously. However, the Ministry of Economy and Finance stated, “No decision has been made regarding the postponement of virtual asset taxation.”
Postponing the virtual asset tax is one of the People Power Party’s general election pledges, while the Democratic Party has pledged to increase the deduction limit from 2.5 million KRW to 50 million KRW. With the increasing possibility of simultaneous postponement of the financial investment income tax and the virtual asset tax, the government and the ruling party are pursuing this plan to reduce political burden.
The Ministry of Economy and Finance is also reviewing reforms to inheritance tax and comprehensive real estate tax. Discussions are ongoing about raising the inheritance tax deduction limit from the current 1 billion KRW and converting the estate tax to an inheritance acquisition tax. However, the announcement may be delayed due to consecutive tax revenue shortfalls.
The discussion on postponing virtual asset taxation is causing controversy due to concerns about tax fairness and revenue shortfalls. Delaying taxation on only stocks, funds, and virtual assets, while other forms of financial income are taxed, could raise equity issues with other taxpayers.
