Ruling party moving toward adopting income tax on cryptocurrency transactions

Politics 15:39 April 28, 2021

SEOUL, April 28 (Yonhap) -- The ruling Democratic Party (DP) is moving toward introducing income taxation on cryptocurrency transactions starting next year despite growing investor calls for delaying the taxation plan, according to party officials Wednesday.

The stance by the ruling party is expected to lend further weight to the government's ongoing taxation plan as it is seeking to levy a 20 percent tax on income from transactions of cryptocurrency starting next year.

"The government's determination to go ahead with the taxation has been confirmed ... the matter should be decided in consideration of fairness in connection with (income tax) levied on other similar assets or products," a party official told Yonhap News Agency.

Another party official also said the DP has no plan to suspend or postpone the taxation plan as some cryptocurrency investors have demanded.

"There's no possibility of putting off the taxation, and the party and the government haven't even discussed suspending the taxation plan," a member of the DP's policy committee noted.

A day earlier, Finance Minister Hong Nam-ki also reiterated that the government will press ahead with the taxation on transactions of cryptocurrency, which financial authorities categorize as "virtual assets," not virtual currencies.

The taxation plan, however, drew a strong backlash from investors amid a recent bull run in the local cryptocurrency market.

Daily transactions of cryptocurrencies on 14 local exchanges were valued at $21.6 billion as of April 15, according to the virtual asset info website CoinMarketCap.

This was heavier than the average daily turnover of 19.1 trillion won in March of Korean stocks by retail investors on the main and secondary stock markets.

As investors' calls for halting the taxation plan increased, however, several lawmakers from within the ruling party argued that taxing cryptocurrency income is premature at a time when codes of regulations for the cryptocurrency market have yet to be prepared.