Views Split on South Korea’s Crypto Tax Plan: ‘Legislate First, Tax Later’ vs. ‘No More Repeated Delays’

Debate intensifies ahead of Jan. 2027 start of crypto taxation

Basic law and tax infrastructure should come first

Better to improve the system than keep postponing it

Ahead of South Korea’s planned rollout of taxation on virtual-asset income next year, debate is intensifying between those who say the legal framework must be put in place first and those who argue repeated delays would undermine tax fairness.

At a seminar titled “2027 Virtual Asset Tax Deferral, When Should It Begin?” held on Oct. 30 at the National Assembly Members’ Office Building in Yeouido, Seoul, participants discussed the state of preparations and unresolved policy issues. Under current law, taxation of virtual-asset income is set to begin on Jan. 1, 2027, though views remain divided over whether it should be postponed again.

Participants largely did not dispute the need to tax virtual-asset income. Instead, the divide centered on how prepared the current system is and when implementation should begin.

Enact a basic law first, then ensure tax fairness

Min Byung-dug, a Democratic Party lawmaker, said in a video message that related systems and infrastructure should be thoroughly reviewed before crypto taxation begins.

Min said he agrees with the principle that income should be taxed. But criticism that South Korea moves slowly on legislation while moving quickly on taxation should be taken seriously, he added. He pointed in particular to unequal tax treatment between domestic and overseas transactions, as well as the absence of a loss carryforward system. Unlike trades on domestic exchanges, transactions through overseas exchanges and personal wallets make tax data relatively harder to secure.

“The government needs to clearly explain when it will actually be able to secure overseas trading data once taxation begins, and how that data can be used in tax verification,” Min said. He added that if profits are taxed, losses must also be properly recognized, underscoring the need for a loss carryforward system.

Kang Hyung-gu, a professor at Hanyang University, also backed a “legislate first, tax later” approach centered on establishing a Digital Asset Basic Act as foundational infrastructure. He said the law should first clarify the legal nature of virtual assets, service providers’ responsibility to submit data, and the standards taxpayers must meet to prove acquisition costs and losses.

Kang said the same virtual asset can have different economic substance depending on whether it is held in custody, lent out, used in validation, or tied to rights to earnings. For that reason, he argued, the legal classification of assets and services should be settled first and then linked to income categories under the tax code.

He also proposed creating a reporting and verification system to prevent missing transaction data and tax errors as assets move among exchanges, personal wallets and overseas platforms. The actual start date for taxation, he said, should be reset only after a broader review of the Digital Asset Basic Act and trial filing results.

Repeated tax delays would undermine tax justice

Others acknowledged shortcomings in the current framework but said the better course is to proceed as scheduled and improve the system afterward rather than grant another delay.

Kim Hyun-dong, a professor at Pai Chai University, said tax equity and tax justice should take priority in the debate over crypto taxation. “Arguing that virtual assets should not be taxed because certain other types of income are not taxed is a parallel-line debate,” Kim said. “When views conflict, the decision should be made based on tax principles.”

He also cited the financial investment income tax, which was scrapped after being postponed twice, and warned crypto taxation could end up on the same path. Kim criticized the National Assembly for failing to sufficiently review implementation readiness and then raising concerns about institutional shortcomings only as enforcement nears.

He also pushed back on the argument that tax infrastructure must be fully complete before enforcement begins. Kim cited the U.S. and Japan as examples of countries taxing related income before the Crypto-Asset Reporting Framework, or CARF, takes effect. At the same time, he called on relevant ministries to clearly explain the state of preparations, given that the National Tax Service has yet to publish a formal notice setting out detailed tax standards.

Byun Hye-jung, a professor at the University of Seoul, also leaned toward establishing clear tax standards and refining the system during implementation rather than delaying it again. She said the debate needs to distinguish between actual institutional shortcomings and taxpayer sentiment. If the legal basis for taxation remains unclear for too long, disputes between taxpayers and tax authorities could drag on instead.

“The current tax system is admittedly not perfect, but deficiencies in the law do not in themselves mean implementation must be delayed,” Byun said. “As the system is enforced, shortcomings can be supplemented through legal interpretation and appeals procedures.”

Still, Byun said the National Tax Service should be cautious about collecting overseas transaction data in advance while taxation remains deferred. She added that tax administration efficiency must be weighed alongside taxpayer privacy and rights.