After the government said it would proceed as scheduled with taxing capital gains on virtual assets in January next year, investor backlash is growing. The government has said for years that it would tax capital gains on virtual assets, but it has postponed implementation several times amid strong resistance from investors.
According to the National Assembly e-petition on the 15th, the petition titled "Abolition of taxation on virtual assets," filed on the 13th, had 23,484 consents as of 8:50 a.m. that day. The petition will collect consents until on the 12th of next month. If a National Assembly public consent petition receives consents from more than 50,000 people within 30 days from the date it is made public, it is referred to the relevant committee, such as The National Assembly's Legislation and Judiciary Committee.
The petitioner said, "While taxes on traditional financial assets such as stocks have been withdrawn or eased, it is hard to accept, in terms of policy consistency and fairness among investors, the push to impose a separate tax only on virtual assets. Even though they are equally assets for investment purposes, imposing a disadvantageous tax burden only on a specific asset class violates the principle of fairness in taxes."
The government intends to implement taxation on virtual assets as scheduled starting in January next year. The Ministry of Economy and Finance said it would not include an additional deferral for virtual asset taxation in the tax law amendment bill to be announced at the end of July. The government plans to establish detailed taxation standards through a National Tax Service notice and begin taxing income from transfers and lending of virtual assets starting Jan. 1 next year.
Under the current Income Tax Act, income generated from virtual asset transactions is classified as other income. If annual revenue exceeds 2.5 million won, a 20% tax rate applies to the excess, and a 2% local income tax must also be paid. For example, if you earn 3 million won from virtual assets, you pay 110,000 won in tax on 500,000 won.
Even when using an overseas virtual asset exchange, if you have an address in Korea or have resided for 183 days or more, you are subject to taxation under the residence-based taxation principle. You must add up from Jan. 1 to Dec. 31 each year and file and pay directly through the National Tax Service Hometax between May 1 and May 31 of the following year.
There are many documents investors must prepare themselves. You must submit records that show the timing, type, quantity, price, fees, and deposits and withdrawals for virtual asset trades. You must also apply foreign currency conversion using the National Tax Service notice exchange rate or the base exchange rate at the time of the transaction.
Experts recommend submitting materials using CSV (Comma Separated Values), a text file format that stores data in comma-separated form. If you do not file, an additional tax of 20% may be imposed. If you fail to file due to fraudulent acts such as concealing assets, the additional tax rate rises to 40%.
Moon Kyung-ho, director of the income tax system division at the Ministry of Economy and Finance, said at a forum titled "Virtual asset taxation, emergency review," held in the third seminar room of the National Assembly Members' Office Building in Yeouido, Seoul, on the 7th, in response to the claim that it is difficult to secure tax information on overseas exchanges, "Voluntary efforts by individuals are needed to avoid the burden of additional tax."