South Korea Faces Fourth Wave of Calls to Delay Crypto Tax

South Korea is facing a fourth wave of calls to delay the crypto tax. Photo: Forbes

Rising Opposition to Crypto Tax

The tug-of-war over crypto tax in South Korea is heating up again as the law is set to take effect in three months.

A petition requesting a two-year delay on the tax has just surpassed 50,000 signatures on the National Assembly's electronic system, qualifying it for consideration by the relevant committee. As of the morning of September 14, over 50,800 people have signed.

According to the current plan, starting from January 1, 2027, South Korea will impose a 20% tax on profits from the sale, transfer, or lending of crypto, plus an additional 2% local tax, bringing the effective tax rate to 22%.

Investors are exempt from tax on the first 2.5 million won of profit each year. Any amount exceeding this threshold will be classified as other income and will need to be declared starting in May 2028.

This is the fourth time South Korea has faced pressure to postpone this policy. The crypto tax was initially scheduled to take effect in 2022 but was postponed to 2023 and then again to 2025.

This time, opponents argue that the legal framework and tax collection system are not yet complete, and the domestic crypto market is weakening. Imposing the tax now could push investors to foreign exchanges and add further pressure on the domestic crypto industry.

This viewpoint is supported by the financial performance of major exchanges. In the first half of 2026, Dunamu, the company operating the Upbit exchange, saw its revenue drop by 49.1%, while operating profit plummeted by 79.7%. Bithumb also experienced a 48.7% drop in revenue, with operating profit decreasing by 83.4%, resulting in a net loss of 108.7 billion won.

In May, there was an even stronger petition calling for the complete abolition of the crypto tax, which reached 50,000 signatures in just eight days and was submitted to the National Assembly, but it did not progress further.

On August 10, a group of 11 lawmakers led by Jung Sung-kook presented a bill to amend the Income Tax Act, proposing to delay the crypto tax until January 1, 2030, effectively postponing it by another three years. The bill has been forwarded to the Planning and Finance Committee for review.

The lawmakers provided similar reasoning to the investment community. South Korea has only recently completed the initial steps of the digital asset regulatory framework through the Virtual Asset User Protection Act, while broader regulations on the market, investor protection, and tax collection systems are still being developed.

The controversy has intensified as the treatment of crypto and securities diverges further. South Korea has canceled plans to impose income tax on financial investments in stocks while still preparing to tax crypto separately. Investors are also not allowed to carry over crypto losses to subsequent years to offset profits, despite the market's high volatility.

The Land of the Morning Calm currently has about 13 million crypto asset investors, so any tax changes will impact a large segment of individual investors.

Government Sticks to 2027 Deadline

Despite pressure from investors and the National Assembly, the South Korean government has shown no signs of backing down, as reaffirmed at the end of July.

Lee Hyoung-il, the candidate for Deputy Prime Minister and Minister of Economy and Finance, stated on September 13 that the crypto tax will proceed as planned. The National Tax Service of South Korea will publish detailed guidelines before the end of this year.

Mr. Lee directly dismissed the argument that transferring assets to foreign exchanges or personal wallets could cause the tax authorities to lose track of transactions. Data from users of foreign exchanges can be collected through the mechanism of reporting foreign financial accounts and the Crypto Asset Reporting Framework (CARF), which allows countries to exchange tax-related data concerning crypto.

Transactions that have not been automatically recorded by the system can still be detected through investigations into the source of funds and information about tax evasion behavior. The government has stated it will expand infrastructure to address concealment of profits through transactions abroad or between individuals.

Mr. Lee also defended classifying crypto profits as other income, arguing that this approach allows for the application of a basic tax exemption and a uniform tax rate, while also reducing filing costs.

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