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The abolition of the Financial Investment Income Tax (Capital Gains Tax) has effectively been confirmed, revealing challenges for the '2-Year Grace Period for Virtual Assets (Deferral of Taxation)'.

On the 8th, a related person from the Democratic Party's Policy Committee communicated with Bloomingbit, stating, "Although there is no discussion on the abolition of the capital gains tax, it is expected that a grace period will be granted for the sake of equity in the situation where the Financial Investment Income Tax is abolished."

The capital gains tax, scheduled to be implemented on January 1st next year, primarily targets gains from the transfer and lending of virtual assets according to the Income Tax Act. If the income exceeds 2.5 million won annually, a tax of 22%% (including local tax) is imposed.

Domestic investors have strongly opposed the excessive taxation on virtual assets, which are not protected, and as a result, the government proposed a plan in July to extend the start of the capital gains tax from the existing 2025 to 2027 by two years.

Although the government announced the grace period plan, the Democratic Party, which had shown opposition to the government's stance, held the majority, making it uncertain whether the grace period plan would pass the National Assembly. In this situation, the Democratic Party's leadership recently expressed their intention to abolish the Financial Investment Income Tax, gaining support for the grace period and abolition opinions. Accordingly, the grace period plan for the capital gains tax is expected to be confirmed by 2027.

On this day, Min Byung-deok, a member of the Democratic Party, also stated to Bloomingbit, "The virtual asset sector should be recognized as an industry through the Commercial Act, and it can be seen as a fair taxation," adding, "Currently, it is correct that the capital gains tax is being deferred."

On the other hand, if the capital gains tax is deferred, it is pointed out that as much as the extended time, clear regulations related to virtual assets should be established, and a systematic taxation standard, infrastructure, and consumer protection measures should be structured. In particular, issues such as the approval of monthly settlement funds, expansion of basic exemption amounts, and other tax equity issues are highlighted as major resolution tasks.

Hwang Doo-hyun, Son Min, Bloomingbit reporter cow5361@bloomingbit.io