South Korea Tightens Tax Oversight on Cryptocurrency Income

The South Korean government is preparing a taxation system for all income earned by participants in the cryptocurrency market. This is an ambitious attempt to cover all sources of financial inflows in the virtual sector and align them with the country’s overall tax policy.

What exactly will be taxed in South Korea

According to the National Tax Service, various types of income from cryptocurrency activities will be subject to taxation. This includes not only profits from trading but also less obvious sources of income—rewards from staking (delegating crypto assets for blockchain validation) and distributions through airdrops (token distributions to users). The basic principle is simple: any economic benefit obtained from a virtual asset must be declared and taxed.

Research project and reform of the tax system

South Korea’s National Tax Service has initiated a special research project aimed at a comprehensive overhaul of the tax structure for the crypto sector. The goal of this project is to create a transparent and universal system that covers all types of cryptocurrency transactions. During this analysis, experts are studying international experiences in taxing virtual assets and adapting best practices for the local market. This is a lengthy process requiring careful analysis and coordination among various government agencies.

Expected timelines and status of legislative initiatives

After the completion of the research phase, the results will be presented for discussion among ministries and authorities. Legislative changes are planned, but their exact timelines have not yet been determined. Experts believe that South Korea will follow the example of developed economies, where cryptocurrency taxation is becoming an integral part of financial policy. This could lead to additional requirements for major crypto exchanges operating in the country, as well as changes in tax reporting for retail investors.