Korea's ruling party formally seeks 22% crypto tax delay

At a glance

Democratic Party leader Kim Min-seok said on Wednesday, 4 Nov, that the ruling party is formally proposing that the government defer South Korea’s crypto income tax, due to start on 1 Jan 2027, Yonhap reported.
Party lawmakers on the National Assembly’s finance committee had floated a two-year delay, The Korea Herald reported. A final decision is expected after high-level talks between the party and the government.

Kim told a meeting of the party’s supreme council at the National Assembly in Seoul that it was “desirable to first enact the Digital Asset Basic Act to set the overall framework and give companies and investors a period to adapt” (our translation from Korean).

He said the party had reached that view after talks with the government led by the finance committee, known in English as the Strategy and Finance Committee, and after meeting crypto businesses.

Kim acknowledged that the tax had been put off before. This time, he said, the party would fix a clear period for the delay and prepare the groundwork, including the use of overseas transaction data, checks on IT systems and guidance for taxpayers, according to Yonhap.

If the government agrees and the law is changed, it would be the fourth delay since the tax was legislated in 2020.

Why, according to the party

The party weighed tax principles, the state of the domestic industry and fairness between users, Kim said, according to the Herald’s English translation of his remarks.

The decision was not unanimous. Some members argued that taxing crypto now was needed to keep policy credible, while others pointed to missing infrastructure, the Herald said. Democratic Party members of the finance committee agreed on Tuesday to tell the party leadership that a delay was needed.

What is at stake

The tax would apply 22%, including local income tax, to yearly gains from selling or lending crypto above a deduction of ₩2.5 million (about $1,860), the Herald reported.

Without a change to the Income Tax Act, it starts in 58 days.

How we got here

On 25 Oct, reports said the presidential office was leaning toward a fourth delay, with a start in 2029 under review. A Democratic Party lawmaker had already filed a bill to start the tax in 2029.

Kim himself had called for a final check on the tax on 22 Oct. Earlier that week the finance ministry met the five won-market exchanges, which asked for clearer rules.

What’s next

The party and the government are due to settle the length of the delay in high-level talks; no date has been announced. A delay then needs an amendment to the Income Tax Act, passed by the National Assembly.

Until it passes, the tax is still due on 1 January.

This is not tax advice.

This article is for information only and is not investment advice.