PPP’s Lim Yi-ja Says Rushing Ill-Prepared Crypto Taxation Would Confuse Investors

Lim Yi-ja, policy committee chair of the People Power Party, said on September 21 that South Korea should not move too quickly to implement taxation on virtual assets, or cryptocurrencies, before the system is fully prepared.

Speaking at a policy roundtable on improving the digital-asset taxation system at the National Assembly, Lim said concerns persist in the market that the institutions and systems needed to enforce virtual-asset taxes are still not fully in place.

"To collect taxes, it must be clear what is being taxed, and taxpayers must be able to predict how much they have to pay," Lim said. She added that authorities need to know the purchase price to calculate gains and impose taxes, but the system for verifying such basic tax data remains inadequate. For that reason, the current virtual-asset tax system needs closer review.

Lim also said policymakers should take into account fairness with other assets, including stocks. The financial investment income tax, which was initially pursued alongside the virtual-asset tax system, has been abolished, she said. Meanwhile, capital gains earned by small investors trading domestically listed shares on exchanges are not currently taxed. Since taxation of income from virtual-asset investments is still planned, concerns over tax fairness across asset classes should be thoroughly examined, she added.

She also referred to the Digital Asset Basic Act, which is currently being discussed in the National Assembly. Lim said efforts to establish the legal nature of digital assets and create a basic institutional framework should go hand in hand with the tax system.

"If taxation is implemented first when the systems and institutions are not fully prepared, the resulting confusion and burden will inevitably fall on investors and the market," Lim said. She added that she would listen to the industry, supplement what needs to be supplemented and correct what needs to be corrected.