South Korea is set to impose a tax on cryptocurrency gains exceeding 2.5 million won (around $1,740), with a combined tax rate of 22%, beginning January 1, 2027. This decision marks the government's commitment to proceed with the tax without further delays, despite previous postponements.
The tax was initially scheduled to launch in January 2022 but faced multiple delays, first pushed to 2025 and then further extended to 2027 due to a December 2024 amendment.
Deputy Prime Minister Koo Yun-cheol confirmed the tax plan during a meeting with lawmakers on July 29, asserting, “We are pushing forward with the plan to tax [cryptocurrency] starting next year as scheduled.”
Under the proposed taxation framework, any income generated from the transfer or lending of cryptocurrencies will be classified as “other income.” Investors will be eligible for an annual deduction of 2.5 million won, with any profits exceeding this amount subjected to a 20% national tax rate, or 22% when local income tax is included, as per the National Tax Service of Korea.
Critics, including Kim Sang-hoon from the opposition People Power Party, have raised concerns regarding the lack of provisions for loss carry-forwards, suggesting it may drive investors to seek opportunities on foreign platforms, decentralized exchanges, or peer-to-peer markets. He advocated for delaying the tax implementation until the OECD’s cross-border Crypto-Asset Reporting Framework is fully in place.
However, the future of this tax is uncertain. A bill presented in March seeks to eliminate the tax by removing cryptocurrency income from the Income Tax Act. This proposal was discussed in a committee meeting on July 29 and has been referred to a subcommittee for further examination. Unless lawmakers take action to repeal or delay the provisions, the tax is set to take effect on January 1, 2027.
Koo noted that any changes would require a comprehensive review of South Korea's capital-market tax system to determine if cryptocurrency profits should be classified as capital gains.