South Korea Seeks 2029 Start for Crypto Tax
South Korea’s government plans to seek a two-year postponement of its cryptocurrency income tax, moving the proposed start date from January 1, 2027 to 2029. Finance Minister Lee Hyoung-il announced the plan at a Thursday briefing, according to KBS.
The change would represent the fourth delay to a framework introduced in 2020, but it is not yet final. The government must secure National Assembly approval to amend the Income Tax Act and change the statutory start date.
What happened
KBS reported that Lee said the government would postpone the planned January 1, 2027 start date by two years. The levy would apply to annual cryptocurrency gains above 2.5 million won, with a 22 percent tax rate that includes local income tax.
Bitcoin.com News also reported that South Korea plans to defer the 22 percent tax on cryptocurrency gains from 2027 to 2029. Aju Press said the rate consists of 20 percent income tax and a 2 percent local levy, while its reported annual threshold is about $1,860 to $1,900.
BusinessKorea reported that Lee, who is also Deputy Prime Minister and Minister of Finance and Economy, outlined the plan at a November 5 briefing at the Government Complex Seoul. The government will pursue the delay in consultation with the National Assembly, BusinessKorea said.
The existing framework has already moved several times. Aju Press reported that the tax was initially scheduled to take effect in 2022, before later postponements set dates in 2023, 2025 and 2027. KBS likewise described the latest measure as the fourth delay since the tax system was introduced in 2020.
The proposed deferral follows political movement within the legislature. CoinDesk reported on November 4 that Democratic Party lawmakers on the National Assembly’s Strategy and Finance Committee agreed on November 3 to recommend a two-year deferral to party leadership.
Why it matters
The decision concerns a tax framework intended to cover cryptocurrency income rather than a narrow technical adjustment. Under the original plan described by KBS, gains above the annual 2.5 million won threshold would be taxed at 22 percent, including local income tax.
KBS reported that the government considers the timing of international information exchange a central issue. Exchanges of cryptocurrency transaction information with the United States are not scheduled to begin until 2029, the government said, and an earlier domestic tax start could place South Korea’s market at a disadvantage compared with overseas markets.
BusinessKorea similarly reported that officials cited difficulty in securing tax information on overseas transactions. The outlet also said critics argue that the taxation foundation has not been adequately built despite three previous postponements.
The delay would leave the rate and annual threshold unchanged under the proposed framework, according to Cryptonomist. However, the implementation timeline and the administrative systems supporting it remain the principal questions before lawmakers.
CoinDesk noted that Finance Minister Lee Hyoung-il had previously backed beginning the tax on schedule. That earlier position makes the government’s newly announced effort to defer the start date significant, although the reports do not establish why his position changed.
Background and context
The tax would affect investors with gains above 2.5 million won and the exchanges expected to support reporting and information collection. Under the former 2027 schedule, income earned during that year would have been reportable in May 2028.
Officials have pointed to incomplete cross-border reporting arrangements as a reason for waiting. Information exchanges under the Crypto-Asset Reporting Framework with the United States are expected to begin in 2029, while data-sharing tests between the National Tax Service and exchanges remain unfinished preparation work.
Pending Digital Asset legislation is also expected to alter industry rules, adding another layer of uncertainty around the tax’s practical administration. The government’s proposed delay would create additional time for the tax system, transaction-reporting processes and industry rules to be prepared together.
The government also plans to revise aspects of the tax method during the additional preparation period, BusinessKorea reported. Unchained reported that the ministry proposed a three-year loss carryforward and a public-private working group to prepare reforms by the first half of 2027, followed by detailed tax guidelines in the first half of 2028.
These measures are proposals rather than settled law. BusinessKorea reported that the government intends to consult the National Assembly, while Unchained said the ministry will ask the Assembly to move the start date.
What to watch
The immediate issue is whether the National Assembly approves an amendment delaying the tax’s effective date. Until lawmakers amend the Income Tax Act, the January 1, 2027 start date remains the legal schedule, according to the unresolved status described in reports.
Another issue is the final design of the proposed loss carryforward. Unchained reported a three-year carryforward proposal, but the available reports do not specify the full conditions lawmakers may consider.
Observers will also follow the formation of the proposed public-private working group, the planned timetable for tax guidelines, and progress on transaction-data sharing with overseas authorities. The status of Digital Asset legislation and testing between the National Tax Service and exchanges will remain relevant to how the eventual tax framework is administered.
