A South Korean opposition lawmaker has proposed postponing the introduction of a 22% tax on cryptocurrency profits until January 1, 2030, three years later than the current effective date for the tax.
This conflicts with the government, which has just reaffirmed plans to begin taxing cryptocurrency in 2027. About 13 million South Koreans buy and sell cryptocurrency and will pay taxes on annual profits exceeding 2.5 million won, or about $1,800.
Jeong's Amendment Delays Cryptocurrency Taxation to 2030
The bill was proposed by People Power Party opposition lawmaker Jung Sung-kook. Jung plans to amend the Income Tax Act to keep the tax provisions but push the enforcement date from January 1, 2027, to January 1, 2030.
He argues lawmakers and tax authorities need three more years to complete the revision of the virtual asset taxation system, strengthen investor protection, and establish the systems necessary for fair cryptocurrency taxation.
He contends that the statutory deadline arriving on schedule does not justify the start of tax collection. First, taxpayers need a system they can accept.
The proposal came less than a week after the Ministry of Economy and Finance completed drafting its 2026 tax reform package, allowing no further delays regarding cryptocurrency.
Finance Minister and Deputy Prime Minister Choo Kyung-ho on July 29 clearly stated the government's position at a meeting of the National Assembly's Planning and Finance Committee. "At this point, we are proceeding with the taxation starting next year as planned," Choo said.
South Korea Sets 22% Limit on Cryptocurrency Price Gains Tax
Under this system, slated for implementation in 2027, income from selling or lending cryptocurrency, such as Bitcoin and Ethereum, is treated as "other income".
The 22% rate comprises a 20% national income tax and a 2% local tax. It applies only if annual income exceeds the tax-free threshold of 2.5 million won.
The Ministry of Finance gave the example of a trader who earns 5 million won from Bitcoin in a year. After subtracting the 2.5 million won tax deduction, the remaining 2.5 million won is taxed at 550,000 won. Income earned in 2027 will be declared in May 2028.
As cryptocurrency income is classified as other income, losses cannot be carried forward, so a trader who loses money one year and then profits the next will still have to pay tax on the profit earned.
In response, Choo stated that stock trading losses are also not carried forward, adding that the government will review the matter after the tax takes effect if needed.
Another bill from the People Power Party, proposed by lawmaker Sung Il-jong on March 19, seeks to completely remove the cryptocurrency income tax provision from the law.
The party views abolishing the tax as a matter of equality, arguing that taxing cryptocurrency profits while regular stock profits are effectively tax-free constitutes differential treatment of the two investment markets.
Choo noted that in the United States, Japan, and the United Kingdom, cryptocurrencies are taxed as capital gains, but South Korea does not have such a capital gains tax system.
Lawmakers in Seoul approved the cryptocurrency tax provisions, setting an effective date in 2022, then postponing it to 2023, 2025, and finally 2027.
The National Tax Service has created a dedicated digital assets unit. Under the OECD's Crypto-Asset Reporting Framework, South Korea will begin receiving data on its residents' overseas crypto-asset activity from participating jurisdictions next year.
Japan, Germany, and France are among the 48 jurisdictions participating in the program.
