South Korea’s main opposition, the People Power Party (PPP), has filed a bill aiming to scrap the planned income tax on crypto gains — a move that could reshape the country’s digital-asset tax landscape if it gains traction.
What the PPP proposed
- On March 19, PPP floor leader Song Eun-seok submitted an amendment to the Income Tax Act that would remove all provisions taxing digital assets. The proposal was reported by local outlet Digital Asset.
- Under the current law, capital gains from crypto would be taxed at 20% (up to 22% including local levies), with a 2.5 million won deduction limit. The tax is currently scheduled to take effect on January 1, 2027.
Background and delays
- The crypto tax was originally proposed to begin in January 2022 but has been postponed multiple times. The bill’s backers note earlier delays, including a two-year deferral announced in December 2024 that pushed an earlier start date, and say the issue remains politically and administratively fraught.
PPP’s arguments against the tax
- The amendment cites recent joint guidance from the US Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC) that classified most digital assets as commodities rather than securities. PPP lawmakers argue that treating crypto under the same tax framework as securities is inappropriate given that digital assets in Korea are already classified as commodities and fall under value-added tax rules.
- The bill claims that adding a separate income tax would effectively double-tax crypto, undermine tax-system consistency and fairness, and conflict with broader tax policy moves such as abolishing the financial investment income tax aimed at boosting capital markets.
- It also flags practical and administrative hurdles — for example, calculating acquisition costs for non-resident holders — which, the PPP says, would hamper effective enforcement.
Political response and prospects
- The ruling Democratic Party of Korea (DPK) said it will review the PPP’s amendment. DPK Senior Deputy Floor Leader for Policy Kim Han-kyu acknowledged calls to align tax treatment between stocks and crypto but said the ruling party has not been actively pursuing abolition and that there’s no internal consensus.
- The DPK previously pushed to raise the deduction limit to 50 million won rather than abolish the tax, and Kim suggested the PPP’s repeal effort may struggle to win broad support. The amendment will now be examined by the National Assembly’s Finance and Economy Committee.
What’s next
The PPP’s bill marks a high-profile challenge to South Korea’s planned crypto tax and revives debates over classification, fairness and enforceability. Whether the proposal can overturn or reshape the 2027 implementation depends on negotiations in the Finance and Economy Committee and shifting political alignments ahead of that deadline.
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