South Korea's presidential office and government are considering postponing the implementation of cryptocurrency taxation, currently scheduled to take effect in January 2027, by another two years to 2029.
According to information gathered by this newspaper, Cheong Wa Dae had moved toward delaying the implementation of cryptocurrency taxation as of Oct. 25. If finalized, the postponement would mark the fourth delay since the Income Tax Act was revised in 2020.
Under the Income Tax Act, a combined tax rate of 22%, consisting of other income tax and local income tax, would apply to annual income generated from the transfer or lending of virtual assets after deducting a basic exemption of KRW2.5 million.
The presidential office's move toward another postponement is believed to reflect concerns about opposition from younger generations. With support among young people remaining weak and their proportion of cryptocurrency investments relatively high, the administration appears to have concluded that pressing ahead with taxation would be politically difficult.
The decision also appears to take into account the United States' plan to participate in the Crypto-Asset Reporting Framework (CARF) starting in 2029. CARF is a system under which tax authorities in participating countries collect information on users' residences and transactions from crypto-asset service providers and exchange that information with one another.
Given that the United States accounts for nearly half of the cryptocurrency market, there are concerns that delayed U.S. participation could result in reverse discrimination, with taxation disproportionately concentrated on users of South Korean cryptocurrency exchanges.
Taking these factors into consideration, lawmakers from the ruling party have already introduced an amendment that would postpone the implementation of cryptocurrency taxation until 2029.
With the opposition People Power Party also effectively agreeing to another postponement, the measure is expected to pass through bipartisan agreement during deliberations on the budget and tax legislation.
