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The National Assembly of Korea held a plenary session on the night of the 23rd and passed an amendment to the Income Tax Act, which included the postponement of virtual asset taxation by two years.
According to the current law, the tax on virtual assets must be paid from next year at a tax rate of 20% (excluding 2% local tax) for profits exceeding the basic deduction of 2.5 million won. However, with the passage of this amendment to the Income Tax Act, the taxation on virtual assets has been postponed until January 1, 2025.
The national assembly deemed that strengthening the tax infrastructure and preparing the basic law and investor protection devices to protect virtual asset investors should be dealt with first.
With the passage of this tax law amendment, a financial investment income tax will be introduced from January 1, 2025, requiring a 20 percent tax on profits from stock and fund investments.
Although the taxation on profits from stock and fund investments has the same implementation schedule and tax rate as that of virtual asset taxation, the difference is that the basic deduction amount is 50 million won and a carryover deduction is possible for 3 years in case of loss for the former.
The virtual asset industry is demanding that the basic deduction for virtual asset taxation be raised to 50 million won and carryover deductions made possible, just as is the case for stock and fund investments, concerning that, otherwise, investing in virtual assets will be much less attractive compared to stocks or funds.
In the meantime, the enactment of the Digital Asset Act (Virtual Asset Act), which focuses on investor protection, has eventually been pushed back to next year.
Due to the lengthy confrontation between the ruling and opposition parties on the budget bill, they failed to reach an agreement on the Digital Asset Act. The national assembly plans to start discussing the virtual asset bill in mid-January next year.
The government has announced an implementation plan to enact the Framework Act on Digital Assets, which was one of the presidential election pledges and national tasks of President Yoon Seok-yeol’s administration, by next year and to enact starting in 2024.
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