Korea crypto tax delay looks likely as Seoul eyes 2029 start

Another Korea crypto tax delay appears to be on the way. South Korea's presidential office said on Sunday, Oct. 25, that postponing the tax on cryptocurrency income, currently due to start on Jan. 1, 2027, is "under review," while stressing that no final decision has been made.

What happened

In a notice to reporters, the office said the matter was being examined and "nothing has been decided," Yonhap reported. An official quoted by Newsis went further, saying discussions were moving toward delaying implementation, and Seoul Economic Daily reported that the office had settled on another postponement.

The levy would apply a combined 22% rate, including local income tax, to annual income from selling or lending virtual assets above a basic deduction of 2.5 million won. It was written into the Income Tax Act in 2020 and was meant to start in 2022, but it has already been pushed back three times over investor-protection concerns and an incomplete collection system. This would be the fourth deferral.

Officials cited three reasons, according to Newsis and Seoul Economic Daily: preparations for collection are not finished, younger investors strongly oppose the tax, and international data sharing remains patchy.

Why it matters

The data argument carries weight. The OECD's Crypto-Asset Reporting Framework, under which tax authorities swap information on users' trades, begins exchanges next year, but only 46 countries will take part at first and peer-to-peer trades are hard to trace, Newsis said. The United States will join only from 2029. Officials worry that if Korea taxes now, the burden would fall mostly on customers of local exchanges while traders using offshore platforms slip through.

Politics points the same way. Ruling Democratic Party lawmakers have already filed a bill to move the start date to 2029, and the opposition People Power Party has adopted a delay as its official position. With both camps aligned, a Korea crypto tax delay would mainly need to be written into law during the National Assembly's tax review in November.

Seoul has meanwhile been tightening other crypto rules, from blocking unregistered exchange websites to preparing won stablecoin projects such as the Chainlink and LG CNS partnership. Postponing the tax again would give local platforms breathing room as those rules bed in.

What's next

The presidential office plans a government-party consultation once this month's parliamentary audit of state agencies ends, and a quick conclusion through party, government and presidential office talks is possible, Yonhap reported. Democratic Party leader Kim Min-seok wants the question resolved before the year ends.

A delay would not scrap the levy. Exchanges would still need reporting systems, and pushing the start to 2029 would line it up with the year the United States enters the OECD data-sharing network, which officials see as the point when offshore trades become visible. Under that framework, tax authorities collect each user's country of residence and trading records from crypto service providers and swap them with each other, Seoul Economic Daily explained.

Until lawmakers vote, Jan. 1, 2027 remains the legal start date, so investors should treat the Korea crypto tax delay as likely but not done. The official's comments are in Seoul Economic Daily's report.