South Korea’s Digital-Asset Industry Urges Delay to Crypto Tax, Calls for Review of Rollout Timing

South Korea’s digital-asset industry is calling for a delay to virtual-asset taxation scheduled to take effect early next year, saying there is too little time to prepare and that the implementation schedule should be reconsidered.

According to industry officials on September 10, the Digital Asset eXchange Alliance, or DAXA, recently drew up a position paper containing those views on virtual-asset taxation.

The document was written after collecting opinions from domestic virtual-asset service providers, or VASPs, on the planned tax regime. DAXA is understood to have prepared the paper to formally request a tax delay from authorities.

DAXA said in the paper that the preparation period for virtual-asset taxation is insufficient. “The timing of implementation needs to be reconsidered after the infrastructure and information-sharing system for virtual-asset taxation are effectively verified and prior regulatory reforms are stabilized,” it said, adding that consistency between the proposed Digital Asset Basic Act and the tax framework should be secured first.

Pushing ahead with the tax early next year would increase the burden on the industry, DAXA said. It cited unresolved issues including infrastructure for calculating and verifying acquisition costs, systems for determining resident and non-resident status and withholding taxes, the effectiveness of access to information from overseas operators under the Crypto-Asset Reporting Framework, or CARF, and the reflection of tax standards for different transaction types in relevant laws.

DAXA added that the industry does not dispute the need, in the long term, to tax income from virtual assets. At the same time, it said introducing taxation and expanded investigative authority simultaneously could contract domestic trading and accelerate capital outflows overseas, potentially outweighing any increase in tax revenue. It added that the resulting burden and complaints would likely be passed on to service providers.

The group also raised fairness concerns relative to other assets such as stocks. It said tax rules should be redesigned by considering measures such as raising the basic deduction threshold and introducing a loss carryforward of at least five years, or by reviewing an asset-income tax framework that covers both stock and virtual-asset income.

DAXA also said authorities should refer to the phased approach adopted by major overseas jurisdictions: setting tax standards, applying them in practice, gathering feedback and then revising the rules. That, it said, would help prevent taxpayer confusion that could arise if policy research results are implemented immediately without first being reflected in official notices or legislation.