South Korea’s presidential administration is currently contemplating a fourth delay regarding the nation’s 22% tax on digital asset profits, with a target implementation year of 2029 gaining traction among lawmakers and trade associations.
The levy is formally planned to become active on January 1, 2027. The presidential office noted that discussions are underway with various governmental bodies concerning a postponement, pointing to regulatory framework gaps and the difficulty of applying identical rules to local versus international transactions, according to Newsis coverage.
This tax originates from a 2020 revision of the Income Tax Act. It levies a 20% national tax alongside a 2% local tax on yearly earnings derived from trading or lending virtual assets that exceed a 2.5 million won ($1,888) exemption threshold. The launch timeline was initially scheduled for 2022, before being postponed to 2023, 2025, and 2027 as officials admitted that tax infrastructure and investor safety nets were insufficient.
The U.S. data problem
The justification for pushing the timeline to 2029 relies on the OECD Crypto-Asset Reporting Framework, the standard governing how tax authorities exchange digital asset transaction records mutually. South Korea is part of the initial wave of territories scheduled to initiate data sharing in 2027, whereas the United States will not participate until 2029.
A representative from the presidential office informed Newsis that the lack of U.S. trading metrics represents the primary obstacle. Without this information, the National Tax Service would be forced to track down foreign transactions individually, placing an unfair burden on South Korean traders utilizing domestic platforms compared to those using foreign exchanges or self-custody methods.
On October 16, Democratic Party legislator Park Min-gyu together with 13 peers introduced a legislative bill that would defer the tax until January 1 of the second year following the initial international data exchange, effectively targeting 2029. Meanwhile, People Power Party politician Song Eon-seok put forward a separate measure aiming to eliminate the cryptocurrency tax provisions entirely from the statute.
The Korea Digital Asset Business Association voiced its support for the 2029 timeline on Thursday, urging authorities to enact a comprehensive digital asset statute featuring equity-market-level investor safeguards before any taxation is enforced.
A tax fight that has been building
Pressure has mounted simultaneously from multiple angles. Last week, two public petitions—one advocating for the tax’s abolition and another requesting a two-year deferral—each surpassed the 50,000 signature threshold required to mandate formal legislative review. Democratic Party chief Kim Min-seok urged a “comprehensive final evaluation,” marking a pivot for a political faction that previously insisted on the 2027 start date.
Finance Minister Lee Hyeong-il informed a parliamentary audit on Thursday that the administration will determine its course “after thoroughly weighing and compiling every perspective from the industry and the National Assembly.” Financial Services Commission leader Lee Eog-weon stated on the same day that the levy ought to “take diverse conditions fully into account.”>
Although the Virtual Asset User Protection Act came into force in July 2024, the Digital Asset Basic Act—the licensing framework mentioned alongside spot bitcoin ETF approval—has not yet passed. Lawmakers have raised concerns about taxing an asset class before legislation officially defines it.
The National Tax Service is maintaining its schedule. It intends to release a draft proposal concerning taxable crypto revenues before October concludes. The government anticipates finalizing its stance through inter-ministerial negotiations once ongoing audits conclude, with a final resolution determined via National Assembly tax amendments between late November and early December.
Originally published at https://bitcoinmagazine.com/news/south-korea-weighs-fourth-delay-crypto-tax.
