The People Power Party has called for a complete repeal of taxation on virtual assets. The government and the ruling party appear set to implement virtual asset taxation in January next year, and the party has launched a public campaign ahead of the election.
Park Su-young, a People Power Party lawmaker on the National Assembly Strategy and Finance Committee, held an "Emergency review forum on virtual asset taxation" with the Korea Tax Policy Association at the National Assembly Members' Office Building on the 7th.
Under the current Income Tax Act, income arising from the transfer or lending of virtual assets will be classified as other income and taxed starting Jan. 1 next year. For annual virtual asset income exceeding 2.5 million won, a total tax rate of 22% applies, combining a 20% other income tax and a 2% local income tax.
In response, the People Power Party is pushing a bill to abolish virtual asset taxation. With the introduction of the financial investment income tax (FITS) scrapped, applying separate taxation only to virtual assets runs counter to tax equity and tax consistency, it said. The lack of fully built tax infrastructure is also cited as a problem.
In congratulatory remarks, Park said, "With housing prices high, wages stagnant, and inflation sharply up, many young people are using virtual assets as a means to build assets. Taxing virtual assets cuts off young people's ladder to assets," adding, "Abolishing FITS while taxing only virtual assets is inequitable."
Park added, "We held one round of talks with the five major virtual asset exchanges (Upbit, Bithumb, Coinone, Korbit, GOPAX), and the National Tax Service was not properly prepared for taxation," saying, "They say they will build an integrated tax system, but how can a system ordered in March this year be built and tested in time?"
Oh Moon-sung, president of the Korea Tax Policy Association, who delivered the keynote, said, "The crux of the dispute is that the grounds cited for abolishing FITS—market contraction, lack of infrastructure, and double taxation—apply equally to virtual assets," diagnosing, "Forcing taxation only on virtual assets is self-contradictory in legislative logic."
Oh said, "According to Constitutional Court precedents, the principle of equality applies in tax law relations as well. The court held that treating a particular taxpayer differently without a rational reason is not permitted," adding, "Rather than pushing ahead with taxation, preemptive institutional improvements are needed to secure tax equity."
He continued, "Taxation on virtual assets has been postponed three times since legislation in 2020, with 'lack of infrastructure' cited each time as the reason," noting, "Yet over the past five years, there has been no substantive resolution of this issue."
Professor Oh said, "While I do not deny the need for virtual asset taxation, we should prioritize 'tax consistency' over taxation itself," adding, "Taxing in the current manner carries serious problems on theoretical, constitutional, and enforcement fronts."