South Korea will impose a tax on crypto gains over $1,740 starting 2027, signaling a commitment to revenue collection despite previous delays.
Beginning January 1, 2027, South Korea will implement a tax on cryptocurrency earnings exceeding 2.5 million won (approximately $1,740), with a total tax rate of 22%. This move signals the government's intent to move forward despite earlier postponements.
The tax was originally set to take effect in January 2022 but faced several delays, eventually being pushed to 2025 and then to 2027 due to an amendment made in December 2024.
Deputy Prime Minister Koo Yun-cheol confirmed the timeline for the tax during a July 29 meeting with lawmakers, stating, “We are pushing forward with the plan to tax [cryptocurrency] starting next year as scheduled.” Under the proposed taxation rules, income from trading or lending cryptocurrencies will be treated as "other income," allowing for an annual deduction of 2.5 million won. Profits above this threshold will incur a 20% national tax or 22% when local income tax is factored in, according to the National Tax Service of Korea.
Some lawmakers, including opposition member Kim Sang-hoon, have expressed concerns about the absence of provisions for loss carry-forwards, which could lead investors to turn to foreign exchanges or decentralized platforms. He has suggested that the tax implementation be postponed until the OECD's cross-border Crypto-Asset Reporting Framework is fully enacted.
The future of the tax remains unclear. A recent bill aiming to remove cryptocurrency income from the Income Tax Act was introduced in March and discussed in a committee on July 29, with recommendations to send it to a subcommittee. Unless further legislative action occurs, the tax is scheduled to be enacted in January 2027. Koo emphasized that any revisions would necessitate a thorough review of South Korea’s capital-market tax policies to determine the appropriate classification of cryptocurrency gains.
