South Korean Lawmaker Calls for Withdrawal of Crypto Tax Amid Fears of Capital Flight

South Korean lawmaker Park Soo-young has spoken out against the country's planned 22% tax on virtual asset gains, arguing that it unfairly targets roughly 13 million crypto users. The tax is set to take effect on January 1, 2027, and includes an annual deduction of 2.5 million won for investors, with gains above this amount taxed at 20%. When combined with the 2% local income tax, the effective rate reaches 22%, making it one of the highest in the world.

Park made his comments on August 13 on his YouTube channel 'Park Soo-young's Economy TV,' calling for the government to withdraw the planned tax. He argued that the policy would push more Korean capital towards overseas crypto exchanges, citing data showing that 124 trillion won flowed into foreign digital asset exchanges between January and September last year.

Park also criticized the treatment of losses under the planned system, stating that investors who suffer losses from a crypto crash cannot carry them forward. He claimed that this would leave investors facing a 'tax bomb' if they choose not to invest in the domestic stock market, as the financial investment income tax has been scrapped.