South Korea's ruling Democratic Party lawmakers are recommending another two-year delay to cryptocurrency income taxation, potentially moving implementation from January 2027 to January 2029. The proposal cites reporting gaps and regulatory uncertainty. Parliamentary approval remains necessary.
Seoul Economic Daily reported that members of the National Assembly's Finance, Economy and Planning Committee agreed on November 3 to recommend postponement following discussions with government officials.
“We agree with the tax principle that income should be taxed where it arises,” Democratic Party lawmaker Oh Ki-hyung said. Party leadership is expected to review the recommendation within one to two weeks.
Lawmakers identified incomplete records from foreign cryptocurrency exchanges as a major obstacle. South Korea plans to exchange crypto transaction information through the OECD's Crypto-Asset Reporting Framework in 2027, while US participation is expected in 2029.
The report says domestic exchanges may receive transferred tokens without reliable acquisition prices, complicating capital gains calculations. An October 16 proposal from lawmaker Park Min-gyu may link taxation to the second year after qualifying international data exchanges begin.
The pending Digital Asset Basic Act could change how cryptocurrency businesses and transactions are classified. Based on materials submitted to lawmakers, Bithumb estimated that building and testing tax reporting systems would require six to nine months after receiving an appropriate testing environment. Regulators are preparing guidance on staking, airdrops and decentralized finance.
South Korea approved its crypto taxation framework in 2020, initially targeting January 2022. Implementation was subsequently postponed to 2023, 2025, and 2027. Existing rules impose a 20% national tax on annual cryptocurrency gains exceeding 2.5 million won, with local taxes raising the effective rate to 22%. Investors can offset gains against same-year losses, but cannot carry unused losses forward.
The ruling party's leadership will consider whether to support the proposed 2029 deadline. Until parliament amends the Income Tax Act, January 1, 2027 remains the legally scheduled starting date for cryptocurrency income taxation.
The decision could significantly influence domestic cryptocurrency investors, exchange compliance planning, and South Korea's broader digital asset regulatory landscape.
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