South Korea Parliamentary Committee Urges Caution on Repealing Crypto Tax

South Korea’s National Assembly said any move to repeal taxation on virtual assets, or digital assets, should be approached cautiously because of the potential impact on confidence in tax policy and on markets.

Digital Asset reported on July 29 that Choi Byung-kwon, chief specialist of the National Assembly’s Strategy and Finance Committee, made the assessment in a review report on an amendment to the Income Tax Act. The bill was introduced in March by People Power Party lawmaker Song Eon-seok.

“Given the need to strengthen confidence in tax administration and to consider the market impact, repealing taxation on digital assets appears to require careful review,” Choi wrote.

The amendment would remove the legal basis for taxing income from digital assets, effectively abolishing the tax. Under current law, taxation of digital-asset income is scheduled to take effect on Jan. 1, 2027, after being postponed three times.

Choi said reversing a tax policy already decided through parliamentary discussions could undermine policy consistency. He wrote that overturning the decision to tax digital-asset income, which had already been settled through deliberations including at the tax subcommittee, could weaken confidence in tax policy and risk fueling market instability.

He also pointed to the fact that major economies already tax digital-asset income, citing the US, Japan, the UK, France, Germany, Canada and Australia.

At the same time, Choi said arguments raised by those favoring repeal also need to be examined, including fairness relative to the financial investment income tax and gaps in tax infrastructure.

On the fairness issue, he said there could be a counterargument that it is difficult to assess the two systems together because digital assets do not qualify as financial investments. He added that opponents could also argue that, unlike the stock market, the digital-asset market does not require policy support.

On tax infrastructure, Choi said the government may not be adequately prepared. “So far, no additional infrastructure related to digital-asset taxation has been built and put into operation, and the infrastructure needed for implementation has yet to be established,” he wrote. “That makes it difficult to determine whether the necessary infrastructure can be built and settled in time for the 2027 launch without disruption.”

The government plans to begin taxing digital-asset income in January 2027. Within the Democratic Party, there is currently no clear internal opposition, while the People Power Party is calling either for the tax to be repealed or delayed again.