South Korean opposition party moves to eliminate proposed 22% cryptocurrency tax
The People Power Party has introduced legislation to eliminate digital asset income tax provisions ahead of their scheduled implementation in 2027.
The primary opposition party in South Korea has put forward a proposal to eliminate a cryptocurrency tax scheduled for 2027, pointing to concerns about fairness, the risk of double taxation, and difficulties with enforcement.
Based on a Thursday report from eDaily, a local media source, the conservative People Power Party (PPP) has submitted legislation to modify the nation's Income Tax Act, seeking to strike out provisions related to digital asset income and prevent the implementation of a tax on cryptocurrency gains before it takes effect in 2027.
According to the forthcoming regulations, cryptocurrency profits above 2.5 million Korean won would be taxed at a 20% income tax rate plus an extra 2% local tax beginning Jan. 1, 2027. This policy has previously been postponed three times since it was first proposed.
The legislative proposal creates a possible confrontation with tax enforcement agencies, which have already begun developing infrastructure to implement cryptocurrency taxation in the coming year, including a transaction monitoring platform created to track digital asset transactions.
PPP points to fairness gaps, double taxation and enforcement hurdles
Based on eDaily's reporting, the PPP maintained that the existing framework contained three significant problems, namely fairness concerns, double taxation risks, and enforcement obstacles.
The party contended that the majority of individual stock market investors are not required to pay income tax on their profits unless they qualify as major shareholders under specific thresholds, whereas cryptocurrency investors would face universal taxation.
The PPP further noted that because crypto assets are classified as goods within the value-added tax (VAT) system, the addition of income tax creates a risk of applying dual layers of taxation on cryptocurrency.
The party additionally highlighted enforcement obstacles, noting that authorities could face difficulties in establishing acquisition costs for non-resident foreign investors conducting trades on international platforms.
Democratic Party senior deputy floor leader for policy Kim Han-gyu said the ruling party has not seriously discussed abolishing the tax but will review the proposal, according to local outlet Electronic Times.
Tax authority plans AI enforcement tool to track crypto gains
The legislative proposal emerges at a time when tax authorities are preparing to implement enforcement mechanisms for the approaching crypto tax launch.
On March 12, the Korea Times reported that the National Tax Service (NTS) opened a procurement bid for an artificial intelligence-powered platform to analyze crypto trading data and flag potential tax evasion.