Rep. Lim Yi-ja Urges One-Year Delay to Crypto Tax; NTS Chief Says He Will Follow National Assembly Decision

Rep. Lim Yi-ja of the ruling People Power Party said South Korea should delay by one year the planned introduction of virtual-asset taxation in January next year, citing unclear tax standards and inadequate preparation of the computer systems needed to enforce them.

At a National Assembly audit of the Strategy and Finance Committee on October 13, Lim said the crypto tax should be postponed for about one more year. She said the tax system is not fully ready and should be rolled out only after sufficient verification and pilot operations.

Lim said authorities should first secure transaction data from domestic virtual-asset exchanges and repeatedly test the taxation system based on that information. She said the government should accumulate the data in advance, run simulations and stabilize the system through pilot operations before enforcement begins, warning that a rushed rollout could trigger taxpayer backlash.

National Tax Service Commissioner Lim Kwang-hyun responded that the agency, as the body responsible for enforcing tax law, would prepare to carry out whatever legislation the National Assembly passes. He indicated that preparations would continue in line with parliament’s decision on when the tax should take effect.

Lim also said tax standards remain unclear across different types of transactions. She argued that detailed rules have yet to be established for complex activities such as staking, airdrops, hard forks and decentralized finance, or DeFi, including when income is recognized, how assets are valued and how deductible expenses are calculated. She also called for clear guidance on the legal definition of virtual-asset lending, how to distinguish rewards from principal repayments, and how such transactions differ from DeFi activity.

Asked about the National Tax Service’s preparations, including the release of formal guidance on crypto taxation, Commissioner Lim said the agency is preparing to issue it around November this year. The notice would spell out tax standards for different transaction types.

Commissioner Lim said taxability would be determined based on economic substance rather than the name of a transaction. He added that some cases, including staking, remain ambiguous and require further consultation with relevant ministries.

Another issue raised was the difficulty of tracking transactions made through overseas exchanges and personal wallets. Lim said tax blind spots involving decentralized exchanges, DeFi and offshore perpetual futures trading could leave users of domestic exchanges bearing a disproportionate tax burden. Commissioner Lim also acknowledged limits in obtaining data from overseas exchanges, but said conditions could improve once the Crypto-Asset Reporting Framework, or CARF, takes effect.

Lim also stressed the need to fully test a system that can automatically compare data submitted by exchanges with filings made by taxpayers through Hometax, the National Tax Service’s online filing platform, and correct errors. Commissioner Lim said the related digital infrastructure is being prepared.