[Executive Summary]

• Along with Yoon Suk-Yeol government’s recent announcement for delaying the implementation of the Financial Investment Income Tax for two years, the taxation on virtual assets has also been postponed. Furthermore, in alignment with the postponement of the Financial Investment Income Tax, the ruling party is trying to raise the limits of the tax exemption for virtual assets from 2.5 million KRW to 50 million KRW.

It is confirmed that the taxation on virtual assets, which was scheduled to be enforced on January 1st, 2023, has been postponed for two years. According to the Yoon Suk-Yeol government’s recent announcement named “Economic Policy Tasks of the New Government”, Financial Investment Income Tax is given a two-year grace period. Along with the Financial Investment Income Tax, taxation on virtual assets has been also decided to be postponed for two years. Additionally, there is a possibility for the taxation to be delayed once more even after two years. Ko Gwang-Hyo, the government’s general tax policy officer, emphasized that the government will decide on a contingent time schedule for the taxation of financial income and virtual assets in accordance with the market situation in the future.

Besides, a member of the People’s Power party, the ruling party, Jung Hee-Yong has proposed the newly amended income tax law reflecting the above postponement plan. The law includes raising the limits of the tax exemption for the taxation on virtual assets, from 2.5 million KRW to 50 million KRW. According to Jung Hee-Yong, considering that the Financial Investment Tax is exempted up to 50 million KRW, there is a need to raise the bar for virtual assets which is likely to be categorized as a sub-part of the Financial Investment Tax to be treated fairly.

The income tax on virtual asset transactions for individuals will be postponed for two years, directly and indirectly benefiting certain relevant businesses. However, the policy on virtual asset taxation in Korea is changing quite rapidly. Therefore, it is recommended for individuals and related businesses to continuously pay close attention to those issues to adjust their financial or business plans accordingly.