Key facts
- South Korea will tax cryptocurrency gains exceeding 2.5 million won ($1,740) starting January 1, 2027.
- The combined tax rate will be up to 22%, including national and local income tax.
- This marks the fourth postponement of the cryptocurrency tax measure.
- Concerns have been raised about the absence of loss carry-forward provisions.
- A legislative bill has been introduced to repeal the cryptocurrency tax.
South Korea is moving forward with plans to tax cryptocurrency gains starting January 1, 2027, signaling no further postponement of the measure. The proposed tax will impose a combined rate of up to 22% on annual gains exceeding 2.5 million won (approximately $1,740). This tax has faced multiple delays since its original planned implementation in January 2022.
Deputy Prime Minister Koo Yun-cheol confirmed the government's intention to proceed with the taxation plan, stating it would be taxed as "other income." Investors will be allowed an annual deduction of 2.5 million won, with gains above this threshold subject to a 20% national tax rate, plus an additional 2% for local income tax.
However, the plan faces opposition in parliament. Kim Sang-hoon, a member of the principal opposition People Power Party, criticized the absence of loss carry-forward provisions, arguing it could negatively impact domestic demand and encourage investors to move their activities to offshore exchanges, decentralized platforms, and peer-to-peer markets. He suggested that taxation should be delayed until the OECD's Crypto-Asset Reporting Framework is fully operational.
Implementation remains uncertain as a bill introduced in March seeks to abolish the tax by removing cryptocurrency income from the Income Tax Act. This bill was taken up by a parliamentary committee and referred to a subcommittee. Deputy Prime Minister Koo indicated that any repeal or delay would necessitate a comprehensive review of South Korea's capital market tax regime to determine how crypto profits should be classified.