Korean report calls for virtual asset tax classification overhaul

A South Korean parliamentary research body stated that the current tax classification of income from virtual assets as miscellaneous income does not align with the Income Tax Act and needs revision before taxation begins. In a report published on Nov. 5, the National Assembly Research Service indicated that income from the transfer of digital assets resembles capital gains due to price fluctuations. It recommended that transfer gains be classified as capital gains instead of miscellaneous income to better fit the income tax system. The report also highlighted a tax inconsistency: income from direct trading of digital assets is taxed as miscellaneous income, while gains from the sale of overseas spot ETFs tracking digital assets are taxed under the capital gains framework for overseas stocks.

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