South Korea's ruling Democratic Party has formally proposed delaying the country's cryptocurrency income tax, now due to begin on January 1, 2027.
Party leader Kim Min-seok announced the proposal during a Supreme Council meeting at the National Assembly on Wednesday, November 4. He said lawmakers consulted government officials and cryptocurrency businesses before recommending another postponement. A new start date has not been approved.
The tax would apply to annual gains from selling or lending cryptocurrencies above 2.5 million won, equivalent to around USD 1,880. The proposed rate is 20%, with an additional 2% local income tax. Investors would therefore face a combined 22% levy on taxable gains.
Under current rules, taxpayers would subtract eligible costs and the annual deduction before calculating tax. They would report the income in the following year's filing period.
South Korea introduced the tax provisions in 2020 and originally planned to begin collection in January 2022. Lawmakers have since delayed implementation three times, most recently moving the start to 2027. A further change would require another amendment to the Income Tax Act.
Kim said lawmakers agreed to “first enact the Digital Asset Basic Act to build an overall framework” and allow businesses and investors to adjust. The proposal remains subject to discussions with the government and parliamentary action.
Democratic Party lawmakers on the National Assembly's finance committee recommended a delay on November 3. Committee member Oh Gi-hyoung said the majority supported additional preparation, despite agreement that cryptocurrency profits should eventually be taxed.
“Most people seem to be talking about around two years,” Oh said when asked about the proposed period. Such a delay would move implementation to 2029. Kim did not formally specify a new date during Wednesday's announcement.
The timetable partly reflects international tax reporting arrangements. Lawmakers want better access to records from overseas cryptocurrency exchanges before applying the levy. The OECD's Crypto-Asset Reporting Framework allows tax authorities to exchange information about crypto transactions, with different countries joining on separate schedules.
Lawmakers have also called for testing reporting systems and checking how the National Tax Service would receive transaction records. These steps would help officials calculate taxable gains and provide guidance to investors filing returns.
The Democratic Party wants to pass the Digital Asset Basic Act before implementing the income tax. The planned law would establish broader rules for cryptocurrency businesses, exchanges and stablecoin issuance. Several proposals remain under review in the National Assembly.
Kim said the government should allow businesses and investors to adjust to the legal framework before taxation begins. He also pledged to set a defined postponement period and prepare overseas data collection, computer systems and taxpayer guidance.
The government has not presented a final agreement on postponement. Finance Minister Lee Hyoung-il previously supported retaining the January 2027 start, while industry representatives requested more time to prepare.
For now, the National Tax Service still lists January 1, 2027, as the effective date. The ruling party's proposal will require further government consultations and legislative changes before investors receive a revised timetable.
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