South Korea’s ruling party moves to delay crypto income tax again, eyeing 2029
South Korea’s ruling Democratic Party is preparing to recommend another postponement of the country’s long-delayed cryptocurrency income tax, with a two-year deferral to 2029 emerging as the preferred option.
What happened
- Lawmakers on the National Assembly’s Finance, Economy and Planning Committee agreed on November 3 — after a closed-door meeting with government officials — that more time is needed before the tax is implemented. The recommendation will now go to party leadership and the policy committee for final sign-off.
- Most committee members reportedly favor pushing the start date from January 1, 2027 to January 1, 2029, but the change is not yet approved. Amending the Income Tax Act will be required to alter the current schedule.
Why they want a delay
- Gaps in cross‑border transaction data: Lawmakers said reliable overseas transaction records are essential to enforce the tax fairly. Domestic exchanges often see incoming assets transferred from foreign platforms without access to the original purchase prices, making it hard to calculate gains.
- International reporting timelines mismatch: South Korea will begin exchanging crypto transaction data under the OECD’s Crypto‑Asset Reporting Framework (CARF) in 2027, while the United States is only expected to join in 2029. That staggered participation is complicating decisions about when taxation should reasonably begin.
- Pending digital asset law and exchange readiness: The planned Digital Asset Basic Act — which could change business classifications and transaction rules — is still being finalized. Exchanges have also warned that building and testing reporting infrastructure will take time; Bithumb has estimated 6–9 months in a proper testing environment to ensure data accuracy and integration with tax systems.
Key voices
- Oh Ki‑hyung, the Democratic Party’s committee secretary, reiterated support for the tax principle — “income should be taxed where it arises” — but said the government needs more preparation time given current conditions.
- Park Hae‑young, deputy commissioner of the National Tax Service (NTS), has argued that incomplete overseas records don’t entirely block taxation; authorities can combine available foreign account information and CARF data to close gaps.
- Lawmaker Park Min‑gyu has proposed linking the tax start to CARF operational milestones: his bill would push implementation to January 1 of the second year after the first qualifying CARF exchange of crypto transaction data.
What the tax currently looks like
- Under the framework approved in 2020, individuals pay 20% on annual crypto income above 2.5 million won (about a 22% effective rate with local taxes). The rules cover gains from sales and lending; gains can be offset by losses within the same tax year but losses cannot be carried forward.
- The tax start date has been postponed several times: originally set for 2022, it was delayed to 2023, then 2025, then 2027. If the current 2027 start holds, taxpayers will report 2027 crypto income in May 2028.
Other ongoing work
- The NTS is preparing guidance (expected in November) on how to treat staking rewards, airdrops, hard forks and DeFi transactions. Tax Commissioner Lim Gwang‑hyeon has said the agency is coordinating with exchanges and government bodies to clarify treatment of diverse crypto activities.
- Officials are also evaluating whether existing exchange and tax-reporting infrastructure can handle the requirements for collecting and sharing transaction records with the NTS.
What’s next
- The Democratic Party expects to formalize its position within one to two weeks after further consultations with leadership and the policy committee. High‑level talks between the party and the government are planned, and opposition parties have pushed for either deeper delays or outright repeal.
Why this matters
- Delaying implementation would give regulators, exchanges and international counterparts more time to align reporting systems and legal definitions — potentially reducing compliance errors and enforcement gaps.
- For investors, uncertainty remains: how to compute cost basis for pre‑implementation holdings, how transfers from foreign platforms will be treated, and when tax reporting obligations will finally crystallize.
The situation remains fluid. Any change to the January 2027 start will require legislative action, and lawmakers are balancing the desire to tax crypto income with practical hurdles in cross‑border data availability and market regulation.
South Korea’s ruling Democratic Party is preparing to recommend another postponement of the country’s long-delayed cryptocurrency income tax, with a two-year deferral to 2029 emerging as the preferred option.
What happened
- Lawmakers on the National Assembly’s Finance, Economy and Planning Committee agreed on November 3 — after a closed-door meeting with government officials — that more time is needed before the tax is implemented. The recommendation will now go to party leadership and the policy committee for final sign-off.
- Most committee members reportedly favor pushing the start date from January 1, 2027 to January 1, 2029, but the change is not yet approved. Amending the Income Tax Act will be required to alter the current schedule.
Why they want a delay
- Gaps in cross‑border transaction data: Lawmakers said reliable overseas transaction records are essential to enforce the tax fairly. Domestic exchanges often see incoming assets transferred from foreign platforms without access to the original purchase prices, making it hard to calculate gains.
- International reporting timelines mismatch: South Korea will begin exchanging crypto transaction data under the OECD’s Crypto‑Asset Reporting Framework (CARF) in 2027, while the United States is only expected to join in 2029. That staggered participation is complicating decisions about when taxation should reasonably begin.
- Pending digital asset law and exchange readiness: The planned Digital Asset Basic Act — which could change business classifications and transaction rules — is still being finalized. Exchanges have also warned that building and testing reporting infrastructure will take time; Bithumb has estimated 6–9 months in a proper testing environment to ensure data accuracy and integration with tax systems.
Key voices
- Oh Ki‑hyung, the Democratic Party’s committee secretary, reiterated support for the tax principle — “income should be taxed where it arises” — but said the government needs more preparation time given current conditions.
- Park Hae‑young, deputy commissioner of the National Tax Service (NTS), has argued that incomplete overseas records don’t entirely block taxation; authorities can combine available foreign account information and CARF data to close gaps.
- Lawmaker Park Min‑gyu has proposed linking the tax start to CARF operational milestones: his bill would push implementation to January 1 of the second year after the first qualifying CARF exchange of crypto transaction data.
What the tax currently looks like
- Under the framework approved in 2020, individuals pay 20% on annual crypto income above 2.5 million won (about a 22% effective rate with local taxes). The rules cover gains from sales and lending; gains can be offset by losses within the same tax year but losses cannot be carried forward.
- The tax start date has been postponed several times: originally set for 2022, it was delayed to 2023, then 2025, then 2027. If the current 2027 start holds, taxpayers will report 2027 crypto income in May 2028.
Other ongoing work
- The NTS is preparing guidance (expected in November) on how to treat staking rewards, airdrops, hard forks and DeFi transactions. Tax Commissioner Lim Gwang‑hyeon has said the agency is coordinating with exchanges and government bodies to clarify treatment of diverse crypto activities.
- Officials are also evaluating whether existing exchange and tax-reporting infrastructure can handle the requirements for collecting and sharing transaction records with the NTS.
What’s next
- The Democratic Party expects to formalize its position within one to two weeks after further consultations with leadership and the policy committee. High‑level talks between the party and the government are planned, and opposition parties have pushed for either deeper delays or outright repeal.
Why this matters
- Delaying implementation would give regulators, exchanges and international counterparts more time to align reporting systems and legal definitions — potentially reducing compliance errors and enforcement gaps.
- For investors, uncertainty remains: how to compute cost basis for pre‑implementation holdings, how transfers from foreign platforms will be treated, and when tax reporting obligations will finally crystallize.
The situation remains fluid. Any change to the January 2027 start will require legislative action, and lawmakers are balancing the desire to tax crypto income with practical hurdles in cross‑border data availability and market regulation.