[Created using ChatGPT]
[Created using ChatGPT]

South Korea will begin taxing capital gains from virtual assets as scheduled starting in January next year, with the first filing and payment due in May 2028.

The tax reform package the government announced Monday contains no amendment to the income tax law that would delay or revise the virtual asset taxation regime. If the bill passes the National Assembly and is finalized, the tax will take effect Jan. 1 next year. Originally set to launch in 2022, the measure has been deferred three times before taking effect.

Under the plan, annual capital gains from trading virtual assets such as bitcoin and ether exceeding 2.5 million won ($1,740) will be taxed at 20% on the amount above that threshold. The effective rate, including local income tax, comes to 22%.

The government has reaffirmed its intention to proceed with the tax. Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol told the National Assembly's Strategy and Finance Committee on Wednesday that the tax deferral is set to expire at the end of this year. "We will implement it next year and make any necessary adjustments along the way," he said.

Some in the market have raised concerns that the tax could push investors toward offshore exchanges or tax havens. People Power Party lawmaker Kim Sang-hoon argued that taxing virtual assets would likely drive investors to route their money through overseas tax havens. "The domestic market will face catastrophe," he said.


forest@heraldcorp.com