South Korea’s Democratic Party formally submitted a proposal to postpone the implementation of the nation’s tax on cryptocurrency income, which is currently slated to begin on January 1, 2027.
Ruling party calls for legislation before taxation
At a meeting of the party’s Supreme Council held at the National Assembly, Democratic Party leader Kim Min-seok outlined the proposal. He indicated that party members agreed the country must pass the Digital Asset Basic Act before imposing any tax on digital asset profits.
Kim stated that the Digital Asset Basic Act would establish comprehensive regulations for the crypto industry in South Korea, providing both companies and investors adequate time to adapt before the planned tax begins.
Kim Min-seok explained that the Digital Asset Basic Act should precede the crypto tax, ensuring a smoother adjustment process for market participants once the new framework takes effect.
The party reached this decision after consultations with the Strategy and Finance Committee, negotiations with government officials, and engagement with businesses in the crypto sector.
First approved in 2020, the tax has already been postponed several times. Under the most recent schedule, the policy would require investors to pay a 22% tax on profits exceeding 2.5 million won, or approximately $1,869, from cryptocurrency transfers or loans within a year.
Current tax framework and planned changes
According to the current policy, only gains above 2.5 million won would be taxable. Investors earning less than this threshold annually would owe no tax, while gains above it would be subject to the full rate.
| Tax Policy | Current Plan |
|---|---|
| Start Date | January 1, 2027 |
| Tax Rate | 22% (including local tax) |
| Exemption Threshold | 2.5 million won (approx. $1,869) |
| Covered Gains | Transfers and lending of digital assets |
Kim emphasized that this would be the fourth deferral since the law’s initial passage and promised that the party would define a fixed timeline for postponement.
Remaining hurdles before tax enforcement
Kim identified several prerequisites before enforcing the tax. Among these are collecting data on overseas transactions, testing the necessary IT infrastructure to handle taxpayer data, and developing clear guidance for taxpayers.
Party leadership pledged to thoroughly prepare data systems, international information exchange, and educational materials for investors before any crypto tax is introduced.
The proposal does not automatically alter the legal start date for the tax. The law’s current implementation remains unchanged unless the latest delay receives official approval from the government.
Last week, reports indicated the presidential office was evaluating the possibility of moving the tax start date further, potentially to 2029. This schedule would align with when the United States plans to join the OECD’s Crypto-Asset Reporting Framework, creating a more coordinated international approach to crypto taxation.
The Organization for Economic Cooperation and Development’s Crypto-Asset Reporting Framework aims to facilitate global tax authorities in sharing transaction data, which connects with Kim’s requirement for access to overseas transaction information before implementing domestic taxation.
With the Democratic Party’s formal proposal now recorded, the decision on whether to approve a fourth tax deferral shifts to the government. As of yet, no final decision has been announced.
Mini dictionary: Digital Asset Basic Act, a proposed South Korean legal framework designed to regulate digital asset markets, set rules for industry practices, and provide investor protections before the commencement of crypto income taxation.
