South Korea is edging closer to postponing the implementation of its crypto tax policy for a fourth time, signaling that the country’s digital asset investors may not face taxes on their profits until at least 2029.
Potential policy delay gathers momentum
Local media have reported that the presidential office is inclined to support deferring the introduction of the crypto tax. The policy, which is currently scheduled to take effect on January 1, 2027, would apply a 22% tax on annual gains from digital assets above 2.5 million won, or roughly $1,888.
The proposed tax structure incorporates a 20% national income tax and an added 2% local tax. Under the current draft, individuals exceeding the annual profit threshold within a calendar year would be subject to these taxes.
However, lawmakers and industry figures have intensified calls to hold off on the crypto tax, arguing that South Korea lacks the necessary infrastructure to effectively implement and enforce such a framework. In particular, critics cite the government’s limited capacity to monitor cryptocurrency transactions on foreign exchanges as a key challenge.
Several policymakers argued that introducing the tax ahead of an effective cross-border reporting system could create a competitive disadvantage for domestic crypto exchanges and their users when compared to overseas platforms.
Repeated postponements since 2020
South Korea’s crypto gains tax was first approved in 2020, with an original aim to bring the new taxes into force by January 2022. Since then, policymakers have postponed the policy three times: first to 2023, then to 2025, and finally assigning January 1, 2027, as the enforcement date.
This latest move could see the introduction pushed back yet again, potentially to 2029.
New bill ties tax timeline to international reporting
Earlier this month, Park Min-kyu, a lawmaker from the Democratic Party, proposed a bill aiming to link the start of crypto taxation to the timeline of international information-sharing initiatives. Specifically, the bill would delay tax enforcement until two years after South Korea participates in its first exchange of crypto transaction information under the Organization for Economic Cooperation and Development’s (OECD) Crypto-Asset Reporting Framework, known as CARF.
CARF is an initiative designed by the OECD to enable tax authorities in member states to monitor and analyze cross-border cryptocurrency transactions, enhancing transparency and preventing evasion.
Mini dictionary: Crypto-Asset Reporting Framework (CARF), developed by the OECD, establishes a standardized international system for automatic exchange of information on crypto-asset transactions. The goal is to help tax authorities identify and mitigate tax evasion in digital assets by tracking cross-border activities.
The United States, which is expected to adopt CARF by 2029, represents a significant obstacle. Observers note that South Korean authorities could face difficulty accessing information about transactions involving US-based trading platforms until that time, further complicating domestic compliance efforts.
| Planned Crypto Tax Start | Original Date | First Delay | Second Delay | Third Delay | Possible Fourth Delay |
|---|---|---|---|---|---|
| January 2022 | 2023 | 2025 | 2027 | 2029 (proposed) |
The new proposal suggests that South Korea’s crypto tax should only be enforced after international information-sharing agreements are active, which may push the start date to 2029.
