Digital Asset Taxation to Be Implemented Next Year Amid Controversy Over Loss Carryforward Deductions
The government has decided to implement a 22% tax rate on income from the transfer and lending of digital assets starting next year. This tax will apply to income exceeding 2.5 million KRW annually, with the first filing set for May 2028. However, the lack of loss carryforward deductions means that investors will not be able to offset losses against future income. For example, if an investor puts in 10 million KRW in 2027 and incurs a loss of 4 million KRW, then earns 3 million KRW in 2028, they will be taxed on 500,000 KRW. As a result, investors may find themselves in a position where they have to pay taxes despite actual losses. Additionally, there are concerns that applying a separate tax system solely for digital assets does not align with tax equity principles. The industry anticipates that the lack of clear tax standards will increase the reporting burden on individual investors. Domestic exchanges are worried that the tax system and reporting procedures will not be adequately established before the implementation of the new regulations.
-- Price
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