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After years of delays, South Korea is finally moving forward with its crypto tax. The country plans to impose a 22% combined tax on annual cryptocurrency gains exceeding 2.5 million won (approximately $1,740) starting January 1, 2027.
Deputy Prime Minister Koo Yun-cheol confirmed the government's intention at a July 29 meeting of the National Assembly's Finance and Economy Planning Committee, stating plainly: "We are pushing forward with the plan to tax cryptocurrency starting next year as scheduled."
Three Delays and Counting
The tax was originally due to take effect in January 2022. It was postponed until 2025, then delayed again by a December 2024 amendment that pushed the start date to 2027. The government says there will be no fourth postponement.
Under the current framework, income from transferring or lending cryptocurrency will be taxed separately as "other income." Investors receive an annual deduction of 2.5 million won, with gains above that threshold subject to a 20% national tax rate, or 22% including local income tax.
Critics Warn of Offshore Migration
The proposal faces significant opposition. Kim Sang-hoon of the People Power Party criticized the absence of loss carryforwards, warning that investors unable to offset losses against gains may shift activity to overseas centralized exchanges, decentralized platforms and peer-to-peer markets.
He argued that taxation should wait until the OECD's cross-border Crypto-Asset Reporting Framework is fully operational, making it harder for investors to simply move their activity offshore to avoid the tax.
A bill introduced in March would abolish the tax entirely by removing crypto income from the Income Tax Act. The measure was taken up by the committee on July 29 and referred to a subcommittee. Unless lawmakers repeal or further delay the provisions, the tax takes effect January 1, 2027. South Korea has already been moving on multiple crypto regulatory fronts, with stablecoin rules also under development.
