The South Korean government plans to implement taxation on cryptocurrency income as scheduled, starting next year, without any further delays.
Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance, stated during a report to the National Assembly's Finance and Economy Committee on July 29 that, in response to a question from ruling party lawmaker Kim Sang-hoon about the timing of cryptocurrency taxation, "Currently, we are pushing forward with the plan to tax starting next year as scheduled."
Koo explained that the taxation on cryptocurrencies is currently deferred until the end of this year, but will take effect next year.
Under the current system, income from cryptocurrencies is classified as other income rather than capital gains. As a result, loss carryforwards, which allow investors to offset losses against future profits, are not permitted.
In response to concerns about the lack of loss carryforwards, Koo noted, "In the case of stock investments, carryforwards are also not allowed. Since there are benefits provided by classifying it as other income, we do not allow loss carryforwards."
Koo emphasized that, unlike major countries overseas, South Korea applies a taxation system for cryptocurrency income based on other income rather than capital gains tax. He stated, "In the United States, Japan, and the United Kingdom, cryptocurrencies are taxed as capital gains, while we apply a 20% separate taxation rate as other income and recognize other deductions."
He also mentioned that transitioning the cryptocurrency taxation system to a capital gains tax framework would require a comprehensive review of the capital market taxation system, including financial investment income.
Koo added, "To shift to a capital gains tax system, we need to consider how to approach the entire capital market, not just cryptocurrencies. We will implement the taxation next year and make adjustments as necessary based on the outcomes."
* This article has been translated by AI.
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