TL;DR
- South Korea is considering postponing its crypto capital gains tax until 2029, although it is currently scheduled to take effect in January 2027.
- The 22% tax would apply to annual gains exceeding 2.5 million won. The measure has already been postponed three times since its approval in 2020.
- The government wants to coordinate the tax’s implementation with the international CARF framework, particularly the United States’ planned participation in 2029.
South Korea is considering delaying its tax on cryptocurrency gains until 2029, a measure currently scheduled to take effect on January 1, 2027, that has already been postponed three times.
According to local news outlet Newsis, the presidential office is holding discussions with various government agencies to assess another postponement. If approved, it would mark the fourth delay of the tax since it was introduced into South Korean legislation.
The original proposal, approved in 2020 through an amendment to the Income Tax Act, establishes a 22% tax rate, including local taxes, on annual gains exceeding 2.5 million won, equivalent to approximately $1,888.
South Korea Seeks to Align Its Crypto Tax With the United States
One of the main reasons behind the potential delay is the implementation of the Crypto-Asset Reporting Framework (CARF), the cryptocurrency tax information-sharing system developed by the Organisation for Economic Co-operation and Development (OECD).
The framework will allow tax authorities in different countries to automatically exchange information on digital asset transactions.
South Korea is scheduled to begin exchanging this data in 2027, alongside dozens of other jurisdictions. However, the United States is not expected to join the system until 2029.
According to Newsis, an official from the presidential office said that the lack of access to transaction data from the United States is one of the main obstacles to implementing the tax.
Without that information, South Korean authorities would have to track overseas transactions individually, which would also increase the compliance burden on users of domestic platforms.
Parliament to Decide Whether to Delay the Tax Until 2029
The cryptocurrency tax legislation was originally scheduled to take effect in 2022, but concerns about tax infrastructure and investor protection led to three postponements.
Park Min-gyu, a lawmaker from the ruling Democratic Party, has already introduced a bill proposing to move the implementation date to January 1, 2029.
The South Korean government must determine its position through consultations among the agencies involved before the National Assembly examines potential legislative changes.
According to the report, parliamentary negotiations are expected to take place between late November and early December, when lawmakers could approve the amendments needed to establish a new implementation date.
