Daksah "Virtual Asset Taxation Should Be Postponed... Insufficient Time for Infrastructure Development and Discussion"

[Image source=Reuters·Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] The Digital Asset Exchange Joint Council (DAXA), consisting of domestic won-market operated virtual asset exchanges Upbit, Bithumb, Coinone, Korbit, and Gopax, has stated that the taxation of virtual assets should be postponed.

On the 22nd, DAXA said, "While we actively agree with the principle that 'taxes exist where income exists,' we believe that a tax deferral is necessary due to the lack of tax infrastructure and insufficient time for tax discussions."

They added, "Currently, a bill proposing a two-year deferral of taxation on virtual asset income is pending in the National Assembly," and "the industry believes that only if this deferral bill passes can thorough preparations during the deferral period enable effective taxation of virtual asset income."

DAXA stated that accurate acquisition cost calculation must be a prerequisite for taxation, and for this, an integrated database system must be established. They explained, "Currently, investors who cannot prove the acquisition price are considered to have an acquisition cost of zero, and acquisition cost sharing between exchanges should be provided using the moving average price. However, due to the nature of the moving average price, if past acquisition prices are revised, it affects all subsequent prices, and if retroactive adjustment of past acquisition costs is recognized, the stability of tax amount calculation is significantly compromised. Conversely, if such adjustments are not recognized, investors may suffer substantial damage."

They also argued that the discussion period for taxation was insufficient. DAXA said, "More meticulous preparation is needed for taxation of virtual assets to ensure stable tax revenue," adding, "For example, virtual asset income refers to income generated from the transfer or lending of virtual assets, but additional discussions are needed not only on income from 'transfer' of virtual assets but also on income generated from lending services."

Furthermore, they noted that amid rising inflation and interest rate hikes, the tax burden on the main generation investing in virtual assets, those in their 20s and 30s, could increase.

A DAXA official emphasized, "Due to various recent issues, the virtual asset market has contracted, increasing investor concerns," and "Taxation should be implemented only after investor protection and a stable tax infrastructure are established to prevent confusion among taxpayers who are investors."

According to the current Income Tax Act, those who earn more than 2.5 million KRW annually from transferring or lending virtual assets must pay 20% tax. This taxation plan is scheduled to be implemented from next year, but the government announced in July that it intends to postpone the implementation of virtual asset taxation to January 2025, a two-year deferral.

While the government and ruling party maintain their stance on deferral, the amendment bill including the deferral of virtual asset taxation has not passed the National Assembly due to difficulties in reaching an agreement with opposition parties.

Meanwhile, as of 4:48 PM on the same day, 6,350 people have agreed to the petition titled "Petition for a 2-year deferral of coin taxation like the financial investment tax," registered on the National Assembly's public consent petition platform. If more than 50,000 people agree within 30 days, it may be referred to the relevant committees.

This content was produced with the assistance of AI translation services.