South Korea's Opposition Seeks to Scrap Controversial Crypto Tax

South Korea's People Power Party has introduced a bill to repeal the planned 22% tax on cryptocurrency gains, which was set to take effect on January 1, 2027. The proposed legislation aims to amend the country's Income Tax Act and remove all provisions related to digital asset income.

The current framework taxes crypto gains above 2.5 million Korean won (approximately $1,665) at a combined rate of 22%, consisting of a 20% national income tax and a 2% local tax. This has led to resistance from investors and the broader industry, resulting in three delays since the tax was first proposed in 2022.

The PPP's argument for abolition centers on three main issues: tax fairness, double taxation, and enforcement difficulties. They argue that applying different rules to similar investment activities is inequitable, and layering an income tax on top of value-added tax would result in two rounds of taxation on the same asset class.

The ruling Democratic Party has not signaled strong opposition but has not endorsed the bill either. Kim Han-gyu, the party's senior deputy floor leader for policy, stated that abolishing the tax had not been a subject of serious internal discussion up to this point.