Will South Korea Put Crypto Taxation on Hold for Three More Years?

• South Korea is considering postponing the crypto taxes until January 2028.
• New amendments to the tax code are anticipated at the end of this month.

The South Korean ruling party, conservative People Power Party (PPP) is considering postponing the taxation of cryptocurrency investment gains with a 20 percent tax to January 2028.

Cryptocurrency income taxation scheduled earlier in October 2021. As the tax law passed by the National Assembly during the former president, Moon Jae-in’s administration. The implementation date has postponed once to January 2023, as the presidential election scheduled for the following year. 

Later, at a press conference in February 2024, the party announced the intention of delaying crypto tax to January 2025. The three year hold on taxation on the cryptocurrency investment gains be implemented, if the bill is approved.

Crypto Taxation Delay in South Korea

South Korean regulators imposed significant pressure on crypto trading and crypto exchanges. This aims to strengthen the regulations under the new digital assets. Income tax in Korea is imposed on incomes is listed in the Income Tax Act. The Act amended on December 29, 2020, to include the transfer of virtual assets.

Virtual asset taxation involves the investment income at a 22% tax rate, including local tax on the amount excluding the basic deduction of 2.5 million won. In Korea, virtual assets are not classified as financial products; they come under other income and not as financial investment income. The tax will cover profits from trading, mining, airdrops, and staking.

However, this aligns with the government and legislative consensus to prioritize regulatory bases before enforcing taxation on virtual assets. And with the government’s abolition of financial investment income taxes and the liberal criteria for stock transfer income tax shareholders,.

Kim Young-jin, chairman of the Tax Subcommittee, opposed the crypto tax policy and called for the formulation of solid crypto regulation. Crypto taxation has been at the top of the government’s agenda as the crypto market grew to new highs over the past few years. 

Meanwhile, in May 2024, the Financial Services Commission released data showing that the number of domestic crypto investors reached 6.45 million as of the end of last year. People in their 30s and 40s accounted for 1.89 million and 1.86 million, respectively.

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