Summary
- Rep. Min Byung-deok said the digital asset tax set to take effect next year would “kill the market” unless it is delayed.
- Min said investors could shift to overseas platforms if taxation begins before the government addresses the lack of foreign transaction data, tax fairness between domestic and overseas exchanges, and the absence of loss carryforwards.
- Min said a bill to delay taxation is needed so the government can first overhaul the system, including the Basic Digital Asset Act, a minimum five-year loss carryforward, and a phased tax-preparation plan.
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Min Byung-deok, a lawmaker from South Korea’s Democratic Party, said digital-asset taxation scheduled to take effect next year should be delayed because the tax framework remains incomplete, including the lack of overseas transaction data and loss carryforward provisions.
Appearing on the YouTube channel SamproTV on Oct. 14, Min said, “If we impose taxes on digital assets now, this market dies,” and called for the start date to be reconsidered.
He cited fairness issues between domestic and overseas exchanges. Authorities can verify trading records from local platforms, but South Korea still lacks a system to obtain transaction data from foreign exchanges. If taxation begins under those conditions, only users of domestic exchanges would effectively be taxed, raising the risk that investors shift to overseas platforms.
Min also argued that the government should first establish the institutional framework for the digital-asset industry. He said taxation should come only after the enactment of the Basic Digital Asset Act, which would set the rules needed to run the market. Imposing taxes before related laws and industry conditions are fully in place would not be appropriate.
He also pointed to the absence of a loss carryforward system. Min gave the example of an investor who records a 10 million won ($7,250) loss one year and a 10 million won ($7,250) gain the next. The investor’s net profit over the two years would be zero, but under the current tax plan, the investor would still owe 1.65 million won ($1,200) in tax after a 2.5 million won ($1,810) basic deduction and a 22% tax rate on the remainder.
He said the system should be revised to allow digital-asset investment losses to be carried forward for at least five years. The former financial investment income tax included a five-year loss carryforward rule, he said, and a similar standard is needed for the digital-asset market, where short-term trading is common.
Min added that he was not calling for the tax itself to be scrapped. “I’m not saying abolish it. I’m saying postpone it,” he said. He added that the government needs time to build a system to collect and analyze overseas transaction data, introduce a loss carryforward regime, and give companies time to prepare tax and foreign-exchange compliance systems.
He also proposed that any bill to delay taxation should include a detailed implementation schedule. The government should adopt a phased plan with preparation tasks set at six-, 12- and 18-month intervals, he said. While taxation is necessary, a regime introduced without fairness and transparency could weigh on the market and the industry, he added.
