South Korea ruling party seeks fourth crypto tax delay

South Korea’s ruling Democratic Party on Nov. 4 formally asked the government to delay a cryptocurrency income tax scheduled to start in January, saying a broader digital-asset law and more preparation should come first.

• Tax start date: Jan. 1, 2027
• Basic annual exemption: 2.5 million won
• Tax rate: 22%, including local income tax
• Previous delays: three

The request, reported by Yonhap on the party’s announcement, came from Democratic Party leader Kim Min-seok after a Supreme Council meeting at the National Assembly. The proposal is not a government decision or a change in the law; the tax remains scheduled to start next year unless lawmakers amend it.

Why does the party want a delay?

Kim said the party wants South Korea to enact the Digital Asset Basic Act first, establishing an overall framework for the crypto market and giving businesses and investors time to adjust. He said the party weighed tax principles, domestic industry conditions and fairness among users.

The party also cited preparation needs: using information about overseas transactions, checking tax data through computer systems, and giving taxpayers guidance. In a separate account of Kim’s remarks, Korea JoongAng Daily reported that Kim said the party would set a clear deferral period, but he did not specify how long it should be.

The Digital Asset Basic Act is a proposed framework for rules broader than the existing Act on the Protection of Virtual Asset Users, which took effect in July 2024. Bills for the broader act remain pending in the National Assembly’s National Policy Committee, according to the JoongAng report.

What would the tax cover?

The planned levy applies to annual income from selling or lending virtual assets. Under the current scheme, the 22% combined rate applies to the amount above a 2.5 million won basic exemption; the rate includes local income tax.

South Korea introduced the tax scheme in 2020. Its start has since been postponed three times, and it is now set for Jan. 1, 2027. The latest proposal would make this a fourth delay if the government and lawmakers agree to change the schedule.

Has the government agreed to postpone it?

No final decision has been announced. Yonhap reported that the party’s finance committee lawmakers had agreed the previous day to recommend a delay to party leaders, with a two-year period discussed mainly within the committee. That discussion is not a settled duration for the party’s formal proposal.

The government and the party still need to reach a conclusion, and another delay would require an amendment to the Income Tax Act before the scheduled start, the JoongAng report said. Until that happens, the January date remains in place. The immediate question for crypto investors and businesses is whether lawmakers can settle both the timing and the preparations the party says should come first.

Sources and documents

• Yonhap on the party’s announcement — yna.co.kr
• Korea JoongAng Daily reported — koreajoongangdaily.com