Proposed Amendment to PPP Income Tax Act… Raising Issues of Double Taxation and Equity
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According to local media outlet eDaily, the People Power Party proposed removing the provision on taxing income from virtual assets through an amendment to the Income Tax Act. This taxation is scheduled to take effect in 2027.
Under the current system, if investment profits from virtual assets exceed 2.5 million won, a 20% income tax and a 2% local tax will be imposed starting January 1, 2027. This taxation has been postponed three times since its introduction.
The People Power Party argued that the current tax system causes equity issues. They pointed out that while stock investors are excluded from taxation if they do not meet the major shareholder requirements, virtual asset investors are included in the broad scope of taxation.
It was also emphasized that imposing additional income tax on virtual assets, given that they are classified as goods under the value-added tax system, could lead to double taxation issues.
Limitations were also raised regarding enforcement. The People Power Party stated that there are practical difficulties in enforcing taxation, citing the difficulty in accurately calculating the acquisition price of investors using overseas exchanges.
The ruling Democratic Party of Korea stated that while they did not reach an immediate agreement on the abolition of the tax, they would review the proposal. Kim Han-kyu, Senior Deputy Representative of the Democratic Party's Policy Committee, said that discussions on the matter would continue.
Meanwhile, the National Tax Service (NTS) is pushing ahead with the establishment of an AI-based system to analyze transaction data ahead of the introduction of virtual asset taxation. The tax authorities plan to use this to detect potential tax evasion and strengthen tax enforcement.
Reporter Jeong Ha-yeon yomwork8824@blockstreet.co.kr
