Korean report urges overhaul of virtual asset tax classification before rollout

A South Korean parliamentary research body said the current tax framework classifying income from virtual assets, or digital assets, as miscellaneous income does not fully align with the existing Income Tax Act and should be revised before taxation takes effect, Digital Asset reported. In a report published on Nov. 5, the National Assembly Research Service said income generated from the transfer of digital assets largely has the character of capital gains realized through price fluctuations. It said transfer gains should therefore, at a minimum, be classified as capital gains rather than miscellaneous income to better fit the current income tax system. The report also identified a tax consistency issue: income generated through direct trading of digital assets is taxed as miscellaneous income, while gains from the sale of spot ETFs listed overseas that track digital assets are taxed under the capital gains framework applied to overseas stocks and similar assets.