National Tax Service Prepares to Issue Virtual Asset Taxation Notice Next Month

With the taxation of income from virtual assets (assets traded electronically, such as Bitcoin) scheduled to begin next year, the National Tax Service has begun preparations to issue a notice next month announcing the tax standards (an official government announcement to the public). Former NTS Commissioner Lim Kwang-hyun said at a National Assembly audit that the service is "preparing to issue the notice around November," and took the position that even various types of virtual asset transactions pose no problem for taxation. Lim has been appointed as the new presidential chief secretary.

Political moves to defer virtual asset taxation are mounting. Democratic Party Rep. Park Min-kyu led the introduction of a bill on the 16th that would defer virtual asset taxation for two years, until January 2029. The bill was co-sponsored by 12 Democratic Party lawmakers and Rep. Park Eun-jung of the Cho Kuk Innovation Party.

The People Power Party has also joined calls for a deferral. During the National Assembly audit of the NTS on the 13th, Rep. Park Soo-young urged a tax deferral, citing the inadequate preparations of domestic exchanges. He pointed out that while the taxation system must be in place by January of next year, all but one of the five won-denominated exchanges, excluding Upbit, have yet to begin development. Earlier, floor leader Jung Chung-rae met with Deputy Prime Minister and Finance Minister Lee Hyung-il last month to discuss deferring or abolishing the tax; Rep. Song Eon-seok introduced a bill to abolish it, while Reps. Kim Sang-hoon and Jung Sung-kuk each proposed amendments to defer it.

The industry has raised concerns that taxation could dampen investor sentiment, noting that under the current structure, individual investors must compile their own transaction information for tax purposes. According to virtual asset analytics firm Chainalysis, South Korea's virtual asset economy stands at $449.1 billion (about 600 trillion won), the largest in East Asia.

Under the applicable system, income from the transfer or leasing of virtual assets will be classified as other income under the current Income Tax Act starting January 1 of next year. Income exceeding 2.5 million won will be taxed at a rate of 22%, including local tax.