Gu Yun-cheol "Comprehensive taxation could be possible if a won stablecoin is established"

Minseung Kang

Summary

The government mentioned the possibility of converting the income tax system to a comprehensive approach if the won stablecoin is established.
It said that if the comprehensive approach is adopted, taxation could be extended to non-standard income such as gains from virtual assets.
However, the government said the won stablecoin system is still at an early stage and that switching to the comprehensive approach is premature.

As the government pushes to legislate the 'won stablecoin', a key pledge of President Lee Jae-myung, the possibility was mentioned that the income tax system could shift from the 'enumeration' principle to the 'comprehensive' principle if the system becomes established. This is because if all transaction records remain on a blockchain-based digital ledger, the government's tracing of the tax base would become much easier.

According to the industry on the 18th, at the National Assembly Budget and Accounts Committee hearing held on the 14th, Choi Gi-sang of the Democratic Party raised the need to introduce 'comprehensive income taxation' to secure the tax base. In response, Deputy Prime Minister and Minister of Economy and Finance Gu Yun-cheol said, "If income tax is to be made comprehensive, the system must be in place," and "If a won stablecoin becomes established, everything will move toward a comprehensive approach."

Currently, income tax is levied only on items specified in law under the enumeration principle. However, if the comprehensive approach is introduced, economic benefits not listed in the tax law would also become taxable. There is speculation that non-standard incomes, such as freelancer income, transactions on overseas platforms, and gains from virtual assets (cryptocurrencies), could be included.

Deputy Prime Minister Gu added, "Because there are taxpayer compliance costs as well, income tax comprehensiveness is possible only if it goes together with social systems."

However, the government says that since institutionalizing a won stablecoin is still at an early stage, it is premature to switch to the comprehensive approach. Park Geum-cheol, Director of Taxation at the Ministry of Economy and Finance, said at the hearing, "If comprehensive taxation is implemented, the scope of taxation will widen, but tax resistance and taxpayer costs will increase accordingly," adding, "It can be examined technically from a legislative perspective, but social consensus must be formed for its introduction."