South Korea Weighs Delaying Cryptocurrency Gains Tax Until 2029

Administrative hurdles and international data gaps

According to a report published on October 25, an official confirmed that internal discussions have shifted toward delaying the tax implementation scheme. The primary reason cited is that the government is not yet fully prepared to collect this specific tax effectively. Furthermore, the presidential administration highlighted persistent difficulties in obtaining transaction data from international digital asset exchanges. „The discussion has turned toward postponing the implementation of the crypto tax,”the official stated in the English translation of the report.

The legal framework stems from amendments to the Income Tax Act introduced in 2020. Initially scheduled for January 2022, the launch date was successively delayed to 2023, 2025, and eventually January 2027. A new delay would represent the fourth postponement since the law was adopted. Under this regulatory framework, investors would pay a combined 22% tax on annual profits from selling or lending digital assets, after deducting a 2.5 million won exemption. This structure includes a 20% national income tax and a 2% local tax. For example, an investor with 5 million won in eligible yearly gains would pay 550,000 won after deductions.

A history of repeated postponements

In August, the government initially maintained the January 2027 deadline in its tax reform plans. However, this recent decision signals a major shift in the presidential office's stance, though it does not automatically alter existing legislation. Parliament must approve a revised legal text before the current deadline can change. Lawmakers will likely review these amendments in November following consultations between the government and the opposition party.

Fairness, global standards, and public sentiment

A central issue justifying the delay is the authorities' ability to gather accurate transaction data from foreign crypto exchanges. Officials pointed to the Crypto-Asset Reporting Framework (CARF), developed by the Organisation for Economic Co-operation and Development (OECD). CARF allows participating nations to exchange transaction data and account holder details. South Korea expects to begin international information sharing in 2027. However, the presidential office factored in the planned participation of the United States starting in 2029 when evaluating the new delay.

Impact on domestic exchanges and industry reaction

Without sufficient data from foreign platforms, officials fear that investors using domestic exchanges would face stricter tax enforcement than those trading abroad. The presidential office cited fairness alongside practical difficulties in verifying transactions involving foreign exchanges and private wallets. Public sentiment, particularly among young investors, has heavily influenced the debate. On October 25, a presidential official noted that politicians view crypto investments as part of younger generations' efforts to build personal wealth. A Gallup Korea poll conducted between October 20 and 22 revealed a drop in the president's approval rating among voters in their twenties and thirties, though the survey did not establish a direct causal link to the crypto tax.

Debates regarding foreign reporting continue, even as the National Service of Taxes prepares to introduce the tax on schedule. The proposed delay would directly affect investors using domestic platforms like Upbit and Bithumb, especially those who expected to pay taxes on eligible gains starting next year. On October 20, government officials were scheduled to meet with representatives of five major crypto exchanges to discuss implementation concerns. These talks followed questions regarding how authorities would calculate income generated from staking, airdrops, and decentralized finance (DeFi) transactions. Tax reporting guidelines for South Korea were anticipated in November, while officials continued developing systems to identify taxable activity on foreign platforms. Industry representatives have warned that uneven reporting requirements might encourage investors to move their trading activity from domestic exchanges to offshore locations. An October sector survey demonstrated substantial support for the delay from both digital asset companies and industry experts alike.