South Korea reviews fourth delay of crypto gains tax to 2029

South Korea's presidential office is reviewing a fourth postponement of the country's 22% tax on crypto gains. A 2029 start date for the crypto tax is gaining support among South Korean lawmakers and industry groups. The crypto gains tax was originally scheduled to take effect on January 1, 2027. The tax dates back to a 2020 amendment to the Income Tax Act. It applies a 20% national rate plus a 2% local rate to annual income from virtual asset transfers or lending above a 2.5 million won deduction. The start date for the crypto tax was previously pushed from 2022 to 2023, then to 2025 and 2027.

Democratic Party lawmaker Park Min-gyu and 13 colleagues filed a bill to push the tax to January 1, 2029. People Power Party lawmaker Song Eon-seok filed a separate bill to strike the crypto tax provisions from the law. The Korea Digital Asset Business Association backed the 2029 date and asked for investor protections before any tax takes effect. Two public petitions, one to repeal the tax and one to defer it two years, each cleared 50,000 signatures. Finance Minister Lee Hyeong-il stated the government would decide on the tax after gathering opinions from the industry and the National Assembly.

The argument for a 2029 start date rests on the OECD's Crypto-Asset Reporting Framework, under which tax authorities swap crypto transaction records. South Korea is weighing a fourth delay of the crypto gains tax to align with the U.S. schedule for integrating CARF. Officials are concerned users of domestic exchanges would bear the tax burden because the U.S. won't share crypto trading data until 2029. The US is scheduled to begin participating in the OECD's Crypto-Asset Reporting Framework in 2029, while South Korea will implement the rules starting in 2027. An official from the Blue House presidential residence stated that they are discussing postponing the implementation of virtual asset taxation.

As of Monday, South Korea's National Tax Service listed Jan. 1, 2027 as the start date for the crypto tax. The Virtual Asset User Protection Act took effect in July 2024. South Korea lawmakers are considering pushing the implementation of the crypto tax to 2029 due to concerns about receiving data from US officials.