Taxation of Virtual Asset Income in Korea:Problems and Solutions

27 Pages Posted: 2 Feb 2023

See all articles by Kab Lae Kim

Kab Lae Kim

Korea Capital Market Institute (KCMI)

Date Written: November 30, 2022


The 2022 amendment to the Income Tax Act aimed at delaying virtual asset taxation until January 1, 2025 is currently pending in the National Assembly. The Korean government has set forth the principle of “establishing legal system before levying a tax” as the ground for deferring virtual asset taxation. The principle gives priority to making a fair and reasonable virtual asset taxation system as well as setting rules and regulations on the crypto market. This article has found that in terms of virtual asset taxation reform, Korea is outstripped by major global economies. Against this backdrop, this article intends to examine legislative challenges regarding the tax treatment and classification of gains from virtual asset transactions as other income category and the virtual asset-specific tax regime, and to present desirable policy responses.

As for taxation on income generated from transactions of virtual assets under the Income Tax Act, a convenient tax system is needed for taxpayers to budget and plan. What is also needed is to encourage long-term investments in high-quality virtual assets and adhere to the principle of levying a tax on the “net” income. To this end, investors should be allowed to offset capital gains and losses of virtual assets and investment properties and to carry forward the net loss for subsequent years. Specific rules on crypto taxation and authoritative interpretations regarding what constitutes income from crypto lending are almost nonexistent. For taxation on income from crypto lending and DeFi, the tax authority should conduct policy research. They also need to notify market participants of a specific tax policy before specific rules on virtual asset taxation comes into force.

For the advancement of Korea’s virtual asset tax regime, it is desirable to establish an efficient virtual asset taxation system and launch an internationally competitive tax service platform for virtual assets. To achieve this goal, Korea’s tax authority should have sufficient discussions to present comprehensive and detailed guidelines for virtual asset taxation.

Note: Downloadable document is in Korean.

Keywords: Crypto tax, Virtual asset taxation

JEL Classification: K34

Suggested Citation

Kim, Kab Lae, Taxation of Virtual Asset Income in Korea:Problems and Solutions (November 30, 2022). Available at SSRN: or

Kab Lae Kim (Contact Author)

Korea Capital Market Institute (KCMI) ( email )

Korea, Republic of (South Korea)

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