"Financial Investment Income Tax abolished... Virtual asset taxation fairness violated" National Assembly debate

"Financial Investment Income Tax abolished... Virtual asset taxation fairness violated" National Assembly debate

If you earn 10 million won next year, stocks will be taxed 0 won, virtual assets 1.65 million won... Effectiveness also pointed out

It has been suggested that the virtual asset taxation to be introduced next year does not align with tax equity and that its effectiveness will not be secured due to insufficient tax infrastructure.

On the 7th, the Korea Tax Policy Association co-hosted an 'Emergency Review Debate on Virtual Asset Taxation' with People Power Party lawmaker Park Soo-young at the National Assembly Members' Office Building in Yeongdeungpo-gu, Seoul, sponsored by the Digital Asset eXchange Alliance (DAXA).

Oh Moon-sung, president of the Korea Tax Policy Association, pointed out in his presentation that taxing only virtual assets while the Financial Investment Income Tax (Geumtuse), which applies to stock investment income, has been abolished, violates the constitutional principle of tax equality.

He explained that if an investor earns 10 million won in profit from investments next year, the tax on stocks would be 0 won, while virtual assets would be subject to a tax of 1.65 million won (22% tax rate on the portion exceeding the deduction of 2.5 million won).

He stated that virtual asset income should be classified as other income, not capital gains, and that the inability to deduct losses also needs to be supplemented.

He also pointed out that there are issues with effectiveness, as it is practically difficult to ascertain the income of users of overseas virtual asset exchanges, which could lead to tax gaps.

Professor Emeritus Hong Ki-yong of Incheon National University's Department of Business Administration said in the discussion, "According to the principle that income should be taxed, virtual assets are also subject to taxation, but considering various circumstances such as market conditions and tax infrastructure, the necessity seems to be less."

On the other hand, Moon Kyung-ho, head of the Income Tax System Division at the Ministry of Economy and Finance, stated, "Our position is that (virtual asset taxation) should proceed as planned," explaining, "While virtual assets are being incorporated into the institutional system through the Virtual Asset User Protection Act, only income tax has not seen improvement."

He added, "Information sharing among member countries will occur through CARF (Crypto-Asset Reporting Framework) for overseas exchanges, so we believe reporting and verification will be possible through this," and "We will enhance tax effectiveness by expanding the infrastructure."