South Korea Legislative Research Service Flags Risk of Legal Disputes Over 2027 Crypto Tax
Forecast Trend Report by Period
South Korea’s National Assembly Research Service said legal disputes could arise when taxation of virtual assets, or cryptocurrencies, begins in earnest next year.
The legislative body recently submitted a response on virtual-asset income taxation to the office of People Power Party lawmaker Park Jeong-hoon, the Seoul Shinmun newspaper reported on July 9.
The research service said tax rules for virtual assets need to be clarified. In particular, it said standards for taxing staking rewards and airdrops should be further detailed.
“New forms of acquisition could trigger debate over whether they should be taxed and how, creating the possibility of legal disputes,” it said. “There is a need to further refine the taxation standards.”
It also addressed the treatment of investment losses. Under the current virtual-asset tax system, gains and losses from crypto investments can be combined, but investors are not allowed to carry losses forward to offset future income.
The research service said that was problematic given the nature of virtual-asset investing.
It also raised concerns about double taxation, saying South Korean residents who earn income through overseas exchanges could face taxes both domestically and abroad.
The government plans to fully implement virtual-asset taxation next year. Income from crypto investing will be classified as miscellaneous income, with an annual deduction of 2.5 million won ($1,810) before tax is imposed on the remainder. Domestic crypto investors will have to report annual gains exceeding 2.5 million won directly to authorities and pay the tax.
