Starting next year, individuals who earn a certain level of income from cryptocurrency investments will be subject to taxation. Ahead of the implementation of the long-delayed virtual asset tax, a discussion on the tax system is set to take place in the National Assembly.
On September 3, the National Assembly announced that Democratic Party lawmaker Moon Jin-seok will host a "2027 Virtual Asset Tax System Review Forum" at 10 a.m. in the National Assembly's member office building in Yeouido, Seoul. The forum is organized by the Digital Asset Exchange Alliance (DAXA) and the Korean Tax Law Association.
According to the current income tax law, the taxation of virtual assets will take effect on January 1, 2027. Income generated from the transfer or lending of virtual assets will be classified as other income and taxed separately.
Taxes will not be levied on the total amount received from selling virtual assets. Instead, the taxable income will be calculated by subtracting the acquisition cost and transaction fees from the proceeds of the transfer or lending. After summing the annual profits and losses, a basic deduction of 2.5 million won will be applied. The remaining amount will be taxed at a rate of 20%, resulting in an effective tax rate of 22% when local income tax is included.
For instance, if an individual generates 10 million won in income from virtual asset transactions after deducting necessary expenses, 7.5 million won will be subject to tax after the 2.5 million won deduction. This would result in a tax of 1.5 million won, plus an additional 150,000 won in local income tax, totaling 1.65 million won.
Conversely, if annual income from virtual assets is below 2.5 million won, it falls within the basic deduction range, and no tax will be incurred. If multiple transactions occur, they will not be taxed individually; instead, the annual profits and losses will be aggregated. Tax filings must be completed during the comprehensive income tax reporting period in May of the following year. Therefore, the first tax filing for virtual asset income generated in 2027 will be due in May 2028.
For virtual assets held before the end of this year, special provisions for determining acquisition costs will apply. For assets held before January 1, 2027, the greater of the actual acquisition cost or the market value as of December 31, 2026, will be recognized as the acquisition cost. This measure aims to prevent taxation on unrealized gains that occurred before the tax implementation.
The government currently maintains its position to proceed with the tax as scheduled next year. Deputy Prime Minister and Minister of Economy and Finance Ko Yoon-cheol stated during a National Assembly meeting on July 29, "As of now, we are pushing forward with the tax implementation as planned for next year." He added, "We will implement it next year and make adjustments as necessary based on the experience gained."
However, there are also proposals in the National Assembly to abolish or further delay the virtual asset tax. Lawmaker Song Eon-seok of the People Power Party introduced a bill in March to remove the taxation provisions on virtual asset income, which was submitted to the National Assembly's Finance and Economy Planning Committee in July. Additionally, lawmaker Jeong Seong-guk proposed a bill last month to postpone the tax implementation date from January 2027 to January 2030. As a result, whether the tax will be implemented as currently planned next year or adjusted during the National Assembly discussions remains a key issue.
* This article has been translated by AI.
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