Could crypto-asset taxation be postponed again? Calls for further delay grow amid debate

[Financial News] The government and the ruling party appear to be deliberating over whether to further postpone crypto-asset taxation. Industry voices continue to denounce the tax, set to take effect as soon as next year, as premature because the tax infrastructure is not yet fully in place. Opposition parties have also pushed back, saying, “We must not kick away the ladder young people need to build their assets.” The People Power Party has adopted a delay in crypto-asset taxation as its official party position, while some Democratic Party of Korea lawmakers have introduced bills to amend the Income Tax Act and postpone the tax.
According to political circles on the 21st, crypto-asset taxation is set to take effect on January 1 next year, as the government did not include an amendment to the Income Tax Act postponing the tax in its tax reform plan. However, calls for a further delay are growing in the National Assembly.
Rep. Park Soo-young of the People Power Party, a member of the National Assembly’s Finance and Economy Planning Committee, held a press conference on the 21st and said the government was not prepared to collect the tax. “We still don’t know who will be subject to taxation or how much revenue it will generate, and the detailed tax criteria have not been finalized,” he said. He added, “Even the tax systems at the five major exchanges are not complete.” He continued, “It is unfair to impose income tax only on crypto assets while abolishing the financial investment income tax,” adding, “We must not kick away the ladder young people need to build their assets.”
Young investors who joined the press conference, including Cho Sang-hyeok, CEO of Bulgaemi Crypto, said, “Even if government agencies and exchanges are ready, citizens who actually have to pay taxes have no idea at all on what basis, by what method, or how much they will have to pay.” They called for an additional two-year postponement. They say the additional grace period should be used to enact the General Act on Digital Assets and redesign the tax system. They argue that the crypto-asset tax system does not allow losses to be carried forward and deducted the following year, unlike the financial investment income tax system, which does.
In the past, bills to postpone or abolish crypto-asset taxation were introduced only by People Power Party lawmakers, but the Democratic Party of Korea has recently introduced a bill to delay the tax as well. Rep. Park Min-gyu of the Democratic Party introduced a bill providing for a two-year delay on the 16th, citing concerns that implementation could cause confusion. The aim is to align the timing with the United States, which is set to join the OECD’s Crypto-Asset Reporting Framework (CARF) in 2029. Rep. Min Byeong-deok, senior vice chair of the Democratic Party’s Policy Committee, also called for a delay last September, saying, “I agree with the principle that there should be taxes wherever there is income, but we first need to establish the foundation to collect them fairly.”
As the government continues to deliberate without reaching a decision, Cho Kuk, head of the Institute for Innovation Policy Research, pushed back on the 21st, criticizing the bill introduced by Rep. Park Min-gyu as a threat to tax justice. He said, “What the government and ruling party should do is not ‘abandon taxation’ but ‘design a rational system.’ The Democratic Party is in exactly the same position as the People Power Party on postponing crypto-asset taxation. This is not right.” The Rebuilding Korea Party, which has been at odds with the Lee Jae-myung government and the Democratic Party day after day, is also clashing with them over a delay in crypto-asset taxation, apparently seeking to distinguish itself.
[email protected] Lee Hae-ram Reporter