South Korea proposes fourth delay to crypto tax, until 2029

South Korea will seek to postpone its cryptocurrency income tax by two years, from 2027 to 2029, Finance Minister Lee Hyoung-il said on Nov. 5, citing gaps in overseas transaction information and work still needed on the rules. The proposal would give officials more time to prepare for taxing gains from domestic and overseas transactions, but it requires action by the National Assembly. In its report on Lee’s announcement, Yonhap said the government plans legislative amendments during the Assembly’s regular 2027 session.

The change reverses the government’s position as recently as mid-October, when it maintained the tax would start as scheduled, according to The Korea Times’ account of the proposal. First enacted in December 2020, the tax was initially due to take effect in 2022. It was later postponed to 2023, then 2025 and 2027. If lawmakers approve this proposal, it will be the fourth delay.

Why does the government want to wait until 2029?

The government says South Korea is due to begin exchanging virtual-asset tax information with the United States in 2029. Starting the tax before that exchange begins could, it argues, put the domestic market at a disadvantage. Officials also want time to refine rules for different types of transactions, improve overseas data collection and make tax filing easier.

The proposed tax would apply a 22 percent rate, including local income tax, to annual cryptocurrency gains above 2.5 million won. The government says the existing framework is meant to tax income; the delay is intended to make collection more effective and fair across domestic and overseas transactions. For investors, a central practical issue is calculating gains when acquisition costs or transaction records are difficult to verify. The Korea Times reported industry concerns about assets moved through overseas exchanges or personal wallets, where reliable purchase records may be unavailable.

What would change during the extra two years?

The government plans to convene a public-private working group to develop detailed rules and improve filing. Yonhap reported that discussions are expected to continue through the first half of 2027, with legislative amendments planned for that year. The government also plans to seek a three-year loss carryforward, allowing investors to offset future gains with losses. Yonhap reported that officials pointed to similar practices in the United States and Britain.

South Korea also plans to speed up work with the Financial Services Commission on a digital-asset law. The Korea Times reported that the proposed law is expected to change asset definitions and rules for service providers. Those changes could affect how the tax system is drawn up, but the proposal does not settle what the final rules will be.

What is at stake if lawmakers approve another postponement?

Waiting for better overseas data and clearer rules could help reduce differences in how investors are taxed, especially when assets move between domestic platforms, overseas exchanges and personal wallets. But another delay extends the period in which the enacted tax is not in force. The Korea Times reported that critics say repeated postponements weaken confidence in government deadlines and question whether crypto investors should continue to receive different treatment from people paying tax on other investment income.

The next milestones are the National Assembly’s consideration of the proposed delay and the government’s planned working-group process. Watch whether lawmakers approve moving the start date to 2029, whether the proposed loss carryforward becomes part of revised legislation, and whether the planned US information exchange and digital-asset law provide the data and rules the government says it needs.

Sources and documents

• report on Lee’s announcement — en.yna.co.kr
• The Korea Times’ account of the proposal — koreatimes.co.kr