Parliament Budget Office Suggests Incentives for Domestic Crypto Exchanges to Boost Tax Revenue

The National Assembly Budget Office has proposed that incentives for domestic cryptocurrency exchanges should be considered as a measure to address challenges related to digital asset taxation. Given that transactions are easier to monitor domestically compared to overseas, the aim is to steer trading toward local platforms to boost tax revenue.

On 17th, the office published a report titled 'Key Issues and Challenges in Digital Asset Income Taxation: Preparing for Implementation in 2027.' The government plans to implement digital asset income taxation from January 1, 2027, with a tax rate of 20% (up to 22% including local taxes) and a basic deduction of 2.5 million won.

The Budget Office identified four key issues: limitations in tax collection, infrastructure for reporting and payment, uncertainty around tax standards for various transaction types, and unclear recognition of losses from digital asset trading. It also outlined future tasks including strengthening tax administration, building reporting and payment infrastructure, and clarifying tax standards.

Specifically, the National Tax Service should enhance its capabilities while exploring incentives to encourage using domestic exchanges. This includes promoting self-reporting by users of overseas exchanges that fail to comply with CARF (Cryptocurrency Automated Reporting Framework), drawing lessons from Japan's approach where low-rate separate taxation (20%) and carry-forward deductions (3 years) are applied for income through registered exchanges.

The report also recommends building tax infrastructure to support smooth reporting and payment before implementation, such as systems that automatically calculate acquisition costs and profits/losses in coordination with exchanges. Pre-implementation guidance and public awareness campaigns should be conducted to minimize taxpayer confusion during the initial phase.