South Korea wants to delay its tax on cryptocurrency gains by two years to 2029.
Finance Minister Lee Hyoung-il announced the decision and acknowledged that the constant delays are a bad look for the government’s credibility.
Did South Korean authorities reverse their decision on digital asset taxes?
Speaking at a briefing at the Government Complex in Seoul, South Korea’s Finance Minister Lee Hyoung-il said his ministry would work with the National Assembly to defer the proposed tax on cryptocurrency profits.
The announcement landed a day after Democratic Party of Korea Chairman Kim Min-seok formally requested another postponement. The government reportedly agreed to the postponement within 24 hours.
Meanwhile, at his September confirmation hearing, Lee said it was “desirable to implement taxation from 2027 as scheduled.”
The government stuck to that through mid-October. Then late in the month, First Vice Finance Minister Kwon Dae-young met the country’s five largest exchanges on October 20 to check if they were ready for the tax and to hear their concerns. The ruling party held its own session with exchange representatives on October 30.
Critics say repeated delays weaken the idea that income should be taxed and hurt trust in government deadlines, a problem that Lee directly acknowledged .
How will the 2029 tax work?
Under the current law, profits from selling or lending digital assets are classified as miscellaneous income. Gains above an annual 2.5 million won (about $1,869) allowance would be taxed a local income surcharge and a 20% national rate, adding up to 22%.
The tax law was written in 2020 and made into a bill in December of that same year, but it has never taken effect. The original 2022 start date was pushed to 2023, then 2025, then 2027.
The government says it’s postponing the tax to 2029 because South Korea is set to start sharing crypto information with the United States that year under the OECD’s Crypto-Asset Reporting Framework.
Lee also mentioned the upcoming Digital Asset Basic Act. It is expected to change the definitions of digital assets and the rules for companies that offer crypto services.
During the extra two years, the government plans to let investors carry their losses forward for three years. The current rules do not allow this, and many people have criticized that. Meanwhile, the United States, the United Kingdom and Japan do not have this problem.
A group of government and private-sector members will work out the details and present reform proposals in the first half of 2027. They will also submit law changes that same year.
The opposition People Power Party called the postponement political. Party spokesman Mun Jong-hyeong accused the government of courting younger crypto investors ahead of the general election scheduled for April 2028. Under the 2027 start date, first filings would have come due in May 2028, weeks after that vote.
Industry groups, on the other hand, welcome the delay. They pointed out that it is hard to prove what investors paid for assets moved through overseas exchanges or private wallets.
Many investors feel the same way. A survey by Tiger Research with Chainalysis found that 73.7% of 2,423 Korean crypto holders opposed the tax under current rules. However, 51.5% of those opponents said they would accept it if the gaps were fixed.
Two petitions were submitted to Parliament, one to scrap the tax and one for a two-year delay, each passed 50,000 signatures.
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