The government has made clear it will implement taxation of digital assets from next year, keeping alive an equity dispute with the financial investment income tax, which it says it will prioritise for market stability. The digital asset industry says that, on top of the gap in tax burdens compared with stocks, preparations such as verifying acquisition prices and tax standards by transaction type are insufficient, and it argues the timing should be reconsidered.

According to the financial investment industry on Sept. 16, Vice Prime Minister and finance and economy minister nominee Lee Hyung-il (이형일) said in written replies for a National Assembly confirmation hearing released on Sept. 13 that whether to introduce capital gains taxes such as the financial investment income tax was "a matter to be reviewed after market conditions are sufficiently stable". He explained the government would overhaul the system in line with changes in financial markets and industry and build a fair and efficient financial taxation framework.

By contrast, he said it was desirable to implement digital asset taxation as scheduled from 2027, based on the principle of taxing where income exists. He said detailed tax standards would be announced in National Tax Service notices within this year so taxpayers would not have difficulty filing.

Under the current Income Tax Act, income from transferring or lending digital assets from Jan. 1, 2027 will be taxed separately as other income.

A 2.5 million won deduction is applied to annual income after subtracting necessary expenses such as acquisition costs and fees, and a 22 percent tax rate including local income tax applies to the excess. The first filing and payment will be in May 2028.

At the centre of the equity dispute is the difference in taxation compared with domestically listed stocks. The financial investment income tax was abolished in December 2024, and capital gains earned by minor shareholders from on-exchange trading of domestically listed stocks are, in principle, not taxed.

Digital asset investors, by contrast, must pay tax if their annual income exceeds 2.5 million won. The gains are similarly earned through investment, but the burden differs by asset type.

The government's view differs. Lee explained that stocks are already subject to transaction tax and capital gains tax on major shareholders, overseas stocks and unlisted stocks, among others, and that taxing digital asset income is necessary for fairness. He also said classifying it as other income reflected considerations such as the basic deduction, application of a single tax rate and easing taxpayers' compliance costs.

Some analysis also says policy conditions have changed since the tax system was originally designed. Bae Jin-soo (배진수), a research fellow at the Korea Institute of Finance, noted in a report titled "Key issues in virtual asset taxation and implications from overseas cases" that digital asset taxation introduced in 2020 alongside the financial investment income tax remained on its own after the latter was abolished.

It argues that consistency with the domestic financial investment asset taxation framework should be reviewed before following overseas taxation cases.

The method of handling losses is also an issue. Digital assets allow trading gains and losses incurred in the same year to be netted, but loss carryforwards that deduct a year's losses from the next year's gains are not allowed. Tax burdens can arise under the relevant year's 기준 even on profits earned in the process of making up for losses from the previous year.

The Digital Asset Exchange Alliance (DAXA) is calling for an increase in the basic deduction limit and the introduction of loss carryforwards of at least 5 years.

A proposal was also made to raise the deduction threshold specifically. A study titled "A study on issues and improvement measures in virtual asset taxation" submitted last month to the National Assembly Budget Office by Ahn Sung-hee (안성희), a professor in the accounting department at the Catholic University of Korea, proposed raising the current 2.5 million won minimum taxable amount to 6 million won to 20 million won.

The researchers proposed reducing the initial burden in consideration of the cost of tax filing and taxpayers' capacity to file, and gradually lowering the 기준 depending on the level of tax infrastructure and the 확보 of overseas transaction information.

Securing transaction information for taxation also remains a task. An industry 의견서 recently prepared by DAXA by gathering views from operators pointed out it is difficult to confirm the original acquisition price of digital assets that entered domestic exchanges via overseas exchanges or personal wallets.

It said that even if the selling price on domestic exchanges can be confirmed, it is difficult to verify when and how much an investor bought overseas.

Rules for calculating acquisition costs are in place. For digital assets held from before the start of taxation, the larger of the actual acquisition cost and the market price as of Dec. 31, 2026 is 인정 as the acquisition cost.

The industry, however, says accurate profit and loss calculations require a system to check transaction histories for assets that moved among multiple exchanges and personal wallets and to verify documents submitted by investors.

Calls also include strengthening computerised links between exchanges and tax authorities. Data structures differ by operator, and there is a wide range of information to process, including not only won deposits and withdrawals but also wallet addresses, holdings, partial fills and details of free distributions.

The industry believes a system is needed to file by aggregating gains and losses incurred across multiple domestic and overseas exchanges and to set standardised criteria for submitting data.

There are also calls to clarify standards by transaction type such as staking, lending and airdrops. Transactions in which participants join network operations and receive rewards or lend assets for consideration differ from simple buying and selling in how profits arise.

Ahn's research team reviewed a plan to tax staking rewards distributed to personal accounts through operators at the market price at the time of distribution. It pointed out that because the taxed amount becomes the acquisition cost when the rewarded tokens are later sold, criteria for determining market price must be clarified.

For airdrops, it suggested either taxing in a lump sum when disposing of tokens received free of charge, or distinguishing between the time of receipt and the time of disposal depending on whether there is consideration and whether a market price exists.

There are also concerns about enforcement gaps between domestic and overseas operators. The industry says domestic exchanges must respond to requests from tax authorities to submit data, but it is difficult to secure transaction information for overseas exchanges and personal wallets at the same level.

DAXA also proposed that preparations are needed to link with the OECD's Crypto-Asset Reporting Framework (CARF) so that a basis for verifying transaction information from overseas operators works in practice.

Some analysis also says the cost of collecting taxes should be weighed, not only whether to proceed. Bae said that while digital asset tax revenue can vary greatly depending on market conditions, investors' direct filing and tax authorities' verification of acquisition costs and tracking of overseas transactions could involve substantial costs.

He explained it may be necessary to consider a plan to tax high-value investors first and later expand it, similar to the taxation of major shareholders of domestically listed stocks.

Bae said, "Virtual asset taxation is not simply a matter of whether to tax, but needs to be judged from the perspective of whether collection costs and taxpayer compliance costs are efficient in light of the tax revenue that can be secured," and added, "A limited taxation plan centred on capital gains of high-value investors could instead be a more efficient taxation plan."