With the digital asset taxation scheduled to take effect in January next year, just over 100 days away, concerns have been raised that the tax infrastructure and standards are not yet sufficiently established. Amid the abolition of the financial investment income tax, voices are growing to reconsider the timing of taxation, as it intersects with the issue of tax equity between stocks and digital assets.

The executives of the five major exchanges and the People Power Party held the policy discussion session on the 21st at the National Assembly in Yeouido, Seoul, stating that the digital asset taxation system and standards must be properly established. People Power Party floor leader Jeong Jeom-sik said, “The principle that taxes should be levied where there is income is clear,” and added, “With implementation just months away, we must once again carefully examine whether the systems and institutions for fair and accurate taxation of digital assets are sufficiently prepared.”

Jeong pointed out, “In cases involving overseas exchanges or personal wallets, it is often difficult to accurately verify acquisition costs and transaction histories. Additionally, the criteria for reflecting income and losses from new forms of transactions have not yet been clearly defined.”

He continued, “The institutional arrangements surrounding the digital asset industry are still in progress,” and emphasized, “It is also necessary to examine whether it is appropriate to proceed with the tax schedule as planned when the industry's institutional foundation is not yet fully established.” He added, “We will thoroughly review what aspects need re-examination, including the timing of tax implementation, and what should be supplemented for reasonable taxation.”

The digital asset industry participants also stated that institutional uncertainties must be resolved before taxation.

Oh Se-jin, chairman of the Digital Asset Exchange Joint Consultative Body (DAXA) and CEO of DigitalX, said, “The legislation of the Digital Asset Basic Act is still under discussion, and with the digital asset taxation scheduled for 2027, this is a critical period for the industry.” He added, “Regulatory uncertainty is a risk not only for businesses but also for investors.”

Oh stated, “Since the initial discussions on digital asset income taxation in 2020, there have been various opinions regarding income classification, tax infrastructure, and implementation timing, and controversies continue even as implementation approaches.” He conveyed, “This indicates a public consensus that the system must be handled with caution.”

Under the current Income Tax Act, income from transferring or lending digital assets starting January 1, 2025, will be classified as miscellaneous income and subject to separate taxation. A 20% tax rate will apply to the amount exceeding necessary expenses and a basic deduction of 2.5 million won from annual digital asset income. Including local income tax, the rate becomes 22%.

The digital asset taxation was introduced through an amendment to the Income Tax Act in 2020. Originally scheduled for implementation in 2022, it was postponed three times—first to 2023, then to 2025, and finally to 2027—due to the need to prepare tax infrastructure and investor protection systems.

While digital assets traded on domestic exchanges are relatively easy to track, those transferred from overseas exchanges or personal wallets to domestic exchanges often lack verifiable acquisition costs. Another issue is determining when and at what price to tax income generated through methods like staking and DeFi, which differ from traditional trading.

Tax equity between stocks and digital assets is also controversial. With the abolition of the financial investment income tax, general investors trading domestically listed stocks on exchanges currently do not pay capital gains tax on trading profits. In contrast, digital assets exceeding 2.5 million won in annual income will be taxed at 22%, including local income tax, starting next year.

The People Power Party decided in March to abolish digital asset taxation as a party policy. Representative Song Eun-seok proposed an amendment to the Income Tax Act to exclude income from digital asset transfers and lending from taxable income. However, the government maintains that taxation will proceed as scheduled in January 2025 under the current law.