South Korea’s presidential office has backed another postponement of the country’s planned 22% cryptocurrency gains tax, with lawmakers considering moving its January 2027 start date to 2029.
Summary
- South Korea’s presidential office has backed another delay to its planned 22% cryptocurrency gains tax.
- The tax remains scheduled for January 2027, but ruling-party lawmakers have proposed moving it to 2029.
- Officials cited incomplete preparations, concerns among younger investors and gaps in overseas transaction reporting.
- Both major political parties support postponement, although they have proposed different approaches.
- Lawmakers could consider amendments in November, following consultations between the government and ruling party.
According to an October 25 report, an official confirmed that discussions had moved toward delaying implementation because the government was not fully prepared to collect the tax. The presidential office considered concerns among younger investors and difficulties obtaining transaction information from overseas cryptocurrency platforms.
“The discussion has moved toward delaying implementation of the crypto tax,” the official said.
South Korea introduced the cryptocurrency income tax through amendments to its Income Tax Act in 2020, initially scheduling implementation for January 2022.
Lawmakers subsequently postponed the start date to 2023, then 2025 and finally January 2027. Another postponement would represent the fourth delay since the law’s introduction.
The current framework would impose a combined 22% tax on annual profits from selling or lending cryptocurrencies after deducting an allowance of 2.5 million won. The rate comprises 20% national income tax and 2% local income tax.
An investor earning 5 million won in qualifying annual gains, for example, would pay 550,000 won after applying the deduction.
In August, the government maintained the January 2027 deadline in its tax reform plans, as crypto.news previously reported on taxation.
The latest decision signals a change in the presidential office’s position, but it does not automatically amend the legislation. Parliament must approve another revision before the existing deadline can change.
A central concern involves the government’s ability to collect accurate trading information from overseas cryptocurrency exchanges.
Officials have pointed to the Organisation for Economic Co-operation and Development’s Crypto-Asset Reporting Framework, or CARF, which enables participating countries to exchange information about cryptocurrency transactions and account holders.
South Korea expects to begin exchanging relevant information internationally in 2027. However, the presidential office cited the United States’ planned participation from 2029 when considering another postponement.
Without sufficient information from overseas platforms, officials fear investors using domestic exchanges could face more consistent tax enforcement than those trading through foreign services.
The presidential office has cited concerns about fairness, alongside the practical difficulties of checking transactions involving foreign exchanges and privately controlled wallets.
Public sentiment among younger investors has influenced the discussions. In separate October 25 coverage, a presidential official said policymakers considered cryptocurrency investing as part of young people’s efforts to build personal wealth.
An October 20–22 Gallup Korea survey found presidential approval among voters in their 20s and 30s had declined, although the survey did not establish that cryptocurrency taxation caused the decline.
The debate over overseas reporting has continued despite preparations by the National Tax Service to introduce taxation under the existing timetable.
Upbit and Bithumb face continued tax uncertainty
The proposed delay would affect investors using domestic platforms such as Upbit and Bithumb, particularly those who would otherwise begin paying tax on qualifying gains next year.
On October 20, government officials were scheduled to meet representatives of five major cryptocurrency exchanges to discuss implementation concerns. The discussions followed questions about how authorities would calculate income from staking, airdrops and decentralized finance transactions.
South Korea’s planned tax reporting guidelines were expected in November, while officials continued developing systems to identify taxable activity involving overseas platforms.
Industry representatives have warned that uneven reporting requirements could encourage investors to move trading activity away from domestic exchanges.
An October industry survey found substantial support for postponement among digital asset businesses and experts. Respondents raised concerns that taxation could encourage capital to move offshore if international reporting arrangements remained incomplete.
The presidential office has not released an estimate of how another postponement would affect tax revenue, exchange trading volumes or government collection costs.
Will lawmakers approve the 2029 crypto tax proposal?
The ruling Democratic Party has already introduced legislation proposing a January 2029 start date. The proposal would give authorities more time to prepare information-sharing systems and coordinate with participating overseas jurisdictions.
Opposition People Power Party lawmakers have supported postponement, although some have pursued a later deadline or repeal of the cryptocurrency income tax.
Democratic Party leader Kim Min-seok previously said the issue “needs to be settled this year,” according to October 25 report.
The presidential office is expected to hold consultations with the government and ruling party after October’s parliamentary audit concludes.
Lawmakers could then consider changes during November’s tax law review. Until Parliament passes an amendment, the cryptocurrency tax remains legally scheduled to begin on January 1, 2027.