People Power Party introduces bill to abolish taxation on digital assets

The People Power Party has introduced a bill to abolish the planned taxation of digital assets, which is set to take effect next year.

On the 19th, Song Eon-seok, floor leader of the People Power Party, introduced as the lead sponsor a partial amendment bill to the Income Tax Act that would repeal tax provisions on capital gains and lending income from virtual assets (cryptocurrencies).

The core of the amendment is to abolish income tax on virtual assets while restructuring the tax framework to keep the value-added tax (VAT) system applied to items such as exchange fees.

The virtual-asset income tax, decided for introduction in 2020, has been postponed three times due to issues such as institutional preparations and is currently slated to take effect in January 2027.

In the market, debate has continued over tax neutrality between stocks and virtual assets following the abolition of the financial investment income tax. A key issue is that no separate income tax is imposed on stock trading gains, while taxation is scheduled for virtual assets.

There is also an argument that if income tax is applied on top of the VAT imposed on virtual-asset exchanges, disputes could arise over how the tax structure should be interpreted. In addition, given the high share of overseas exchange usage, assessments have also pointed to practical limits in enforcement during the tax administration process.

Song said, "We need to pass the amendment swiftly to overhaul the virtual-asset tax framework and protect as many as 13 million investors."