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South Korea’s People Power Party has proposed a bill to remove the virtual asset tax due in January 2027. The bill was introduced by Song Eon-seok, the party’s floor leader, through an amendment to the Income Tax Act. The proposal would delete the legal clauses that seek taxation for digital asset gains.
The move adds a new step to South Korea’s long-running debate on crypto taxation. The country has repeatedly delayed the planned crypto tax. The latest proposal seeks to abolish the tax before the start date arrives.
South Korea Law Sets a 22% Rate on Eligible Gains
Under current law, South Korea plans to tax gains from virtual assets exceeding 2.5 million won, approximately $ 1,670. The national income tax rate is 20%, and when local taxes are added, the total reaches 22%. The tax is scheduled to begin in 2027 unless lawmakers change the law before then.
The measure was initially expected to begin in 2022, but it was postponed multiple times. As a result, crypto gains remain untaxed in South Korea as of March 2026. Even so, the current legal framework remains in place. Thus, the new bill focuses on removing the tax provisions from the statute itself.
South Korea Opposition Cites Double Taxation Issues
The planned tax raises questions about equal treatment across asset classes. South Korea has already abolished the broader financial investment income tax for assets such as stocks. Based on that, the PPP party argues that applying a separate tax only to digital assets would create an uneven standard for investors.
The amendment also refers to the treatment of digital assets as commodities. This classification makes it difficult to place them under a tax approach used for securities. The bill further states that in certain cases, digital assets are already linked to the value-added tax system. Hence, an additional income tax could lead to double taxation.
Administrative Burden Remains Part of the Crypto Tax Debate
The bill raises practical concerns about tax enforcement, as officials may face difficulties when calculating acquisition costs for digital assets. The problem becomes complicated in cases involving non-resident foreigners. It may also pose problems when assets move across different trading platforms or wallets.
These issues have been part of the global policy debate for several years. Still, South Korea’s tax authorities have been preparing for the 2027 rollout. The National Tax Service is developing an AI-based system to track and analyze crypto transactions. Another report claimed the system is intended to support gain calculations and monitor possible tax evasion ahead of the planned launch.
Political Response Will Shape Crypto Tax
The repeal bill must pass through the National Assembly before any legal change can take effect. Kim Han-gyu, senior deputy floor leader for policy of the ruling Democratic Party, stated that the party would review the proposal. This suggests the bill had not yet been seriously discussed within the party.
The debate is unfolding in a country with a large retail crypto market. The Financial Services Commission showed that South Korea’s digital asset market had a capitalization of 95.1 trillion won, or about $63.4 billion, as of June 2025. Additionally, nearly one in five people in the country are crypto users or traders. For now, the issue before lawmakers is whether the planned 2027 crypto tax should remain in place or be removed from the Income Tax Act before implementation.
