The South Korean government is taking measures to reform tax laws and position the cryptocurrency sector, facilitating its development.
Expansion of Tax Regulation in the Cryptocurrency Sector
On July 9, 2025, South Korea’s National Tax Service (NTS) clarified that residents must report comprehensive income tax on virtual assets received from foreign corporations in return for labor, even if their income is paid outside of traditional corporate structures.
According to the NTS’s illustration, the employee in question signed a direct incentive contract with Corporation B, based in Singapore and a subsidiary of Corporation A in Japan. The virtual assets were issued as compensation for work carried out under Corporation B’s direction, without any involvement from Corporation C, which is the Korean affiliate of the company group.
The National Tax Service determined that the virtual assets fall under the country’s Income Tax Act, specifically Article 127 (withholding obligation) and Article 70 (final declaration of tax standard).
Lifting Restrictions for Cryptocurrency Startups
On the same day, South Korea’s Ministry of SMEs and Startups published a legislative notice proposing a partial amendment to the Enforcement Decree of the Special Act on the Development of Venture Enterprises.
The South Korean venture policy originally categorized businesses involved in virtual asset trading and brokerage as restricted industries, which disqualified them from tax breaks, financing, public procurement preferences, and other benefits afforded to certified venture companies.
The rationale behind the restriction was based on concerns about market volatility and user protection. However, with the Virtual Asset User Protection Act enforced in 2024, a wider legal infrastructure exists for the digital asset market. Therefore, authorities now argue that it is inappropriate to continue restricting such companies.
Government Position on Digital Assets
The proposed amendment would remove “virtual asset-related industries,” which include blockchain-based crypto asset trading and brokerage, from the list of restricted venture sectors.
It will open venture status to new technology-based virtual asset companies that demonstrate innovation and business potential, and allow existing venture companies to pursue virtual asset-related projects without the threat of losing certification.
In its public notice, the ministry stated that the revision reflects “the improving public perception of the digital asset industry” and acknowledges “the emerging legal and institutional safeguards for user protection.” The notice read, “It is now necessary to lift outdated restrictions to promote consistency in policy and support future growth.”
South Korea continues to adapt its tax laws and regulations in the cryptocurrency sector, which may stimulate growth and development in this area against a background of improving public opinion and new legal frameworks.
