People Power Party adopts line to abolish virtual-asset taxation… “NTS not adequately prepared”

The People Power Party (PPP) has decided to make it the party’s official position to abolish the planned income-tax levy on virtual-asset (cryptocurrency) gains, which is set to take effect next year. The move is based on the view that, after the abolition of the financial investment income tax, taxation should be aligned with that of equities and that young people’s opportunities to build assets should be protected.

In a press briefing after an on-site meeting on improving the digital-asset taxation system held on the 25th at Coinone’s headquarters in Yeouido, Seoul, PPP lawmaker Park Soo-young said he has already introduced an amendment to the Income Tax Act centered on deleting the provisions for taxing virtual assets, adding that “it is problematic to push ahead with taxation when the government is unprepared.”

Park pointed to limitations in the taxation infrastructure. He said, “The National Tax Service (NTS) lacks sufficient understanding of virtual assets and administrative capacity—to the extent that incidents such as exposure of mnemonics (seed phrases) can be cited,” adding that the international crypto-asset transaction reporting (CARF) sharing system is also focused on aggregate data, making it difficult to identify detailed individual-level records and leaving an insufficient basis for taxation.

He continued, “The current NTS system can collect information only from the five major won-based exchanges,” warning that if taxation is forced through, a balloon effect could emerge with funds moving to overseas exchanges or informal channels. He added that this could “shrink the domestic won market and trigger capital outflows.”

He also raised fairness concerns. Park said, “For young people who find it difficult to build assets due to rising real-estate prices, virtual assets can be an opportunity,” adding that “it is not equitable to abolish the financial investment income tax while maintaining taxation only on virtual assets.”

Kim Eun-hye, the PPP’s senior deputy floor spokesperson, pointed to logical flaws in the tax framework. “Pushing taxation first when even the definition of virtual assets is not clear is inappropriate,” she said, adding that “simply applying uniform financial regulation as-is is an anachronistic idea.”

She also raised the issue of double taxation. Kim said, “In major countries such as the U.S., there is a trend toward viewing virtual assets as commodities,” adding that “there are criticisms that adding income tax on top of a value-added tax already borne by investors through transaction fees amounts to excessive taxation.” She also stressed that “the current structure, which classifies virtual assets as other income and limits the deduction of loss carryforwards, also needs improvement.”

PPP lawmaker Choi Bo-yoon underscored the party’s commitment to fostering the digital-asset industry. “Since the presidential campaign pledge stage, the party has been gathering on-the-ground views through a digital-asset value-up special committee,” he said, adding that the party will pursue legislation aimed at industrial development and improving the investment environment, moving away from a regulation-centered approach. He also said, “Delays in the second phase of legislation are slowing the activation of corporate and foreign investment,” adding that discussions will continue to create a safe investment environment that reflects demand from the younger generation.

Calls for cooperation toward the Democratic Party and the government also followed. Park said, “We have not yet heard the ruling party’s position on abolishing virtual-asset taxation,” adding that he hopes it will be clarified before discussions in the tax subcommittee. Kim said, “Second-phase legislation is as important as virtual-asset taxation,” adding, “We are ready to engage in talks at any time, but without a unified bill, discussions are not moving forward. A constructive change in stance from the government and the Democratic Party is needed.”