South Korea’s ruling Democratic Party has formally asked the government to postpone the country’s long-delayed crypto tax again, setting up what would be the fourth deferral of a levy first written into law in 2020.
Party leader Kim Min-seok made the request at a Supreme Council meeting at the National Assembly on Wednesday. “The DP is formally proposing to the government that the tax on virtual asset income be deferred,” Kim said, according to JoongAng Daily.
Under current law, gains from selling or lending virtual assets above 2.5 million won a year (about $1,860) are due to be taxed at 22%, including local tax, from January 1, 2027.
What Kim actually proposed
Kim framed the delay as a sequencing decision rather than a retreat. “After weighing taxation principles, conditions in the domestic industry and fairness among users, we agreed it is best to first set up an overall framework by enacting a digital asset law and to give companies and investors time to adjust,” he said.
He signaled that this round would come with a firmer timeline. “This time, we will set a clear deferral period and make thorough preparations for the prerequisites, such as using overseas transaction data, computerized verification and taxpayer guidance,” Kim said. He did not say how long the new delay would be.
The number being discussed inside the party is two years. Democratic Party members of the National Assembly’s finance committee agreed on Tuesday to recommend a deferral to the leadership. Rep. Oh Gi-hyoung told CoinDesk that “most people seem to be talking about around two years.”
The bill already tied to CARF
A legislative vehicle for that delay is already on file. On October 16, Rep. Park Min-gyu and 13 other lawmakers introduced an amendment to the Income Tax Act (bill no. 2221923). Local outlet Digital Asset reported that 13 of the sponsors are Democratic Party members and one belongs to the Rebuilding Korea Party.
The bill does not set a new calendar date. Instead, it moves the start of crypto taxation to January 1 of the second year after the year in which crypto transaction data is first exchanged under the OECD’s Crypto-Asset Reporting Framework, known as CARF.
The bill’s explanatory note spells out the reasoning. Data on users of domestic exchanges is relatively easy to collect, it says, but data on trades at foreign venues, including U.S. exchanges, will be hard to obtain until CARF is fully running. Taxing too early would concentrate the burden on people who trade on Korean platforms and hurt fairness between domestic and offshore users. The note points out that the United States, which it calls the world’s largest virtual asset market, joins CARF in 2029. It also argues that the Digital Asset Basic Act should be in place before any tax applies.
Because the start date is linked to the first data exchange, the actual delay would depend on when that exchange takes place, not on a fixed date.
Criticism from the left
The opposition People Power Party has also pushed for a delay, so the proposal faces little resistance from the main conservative bloc. Pushback has come instead from smaller progressive parties.
The Hankyoreh reported that Cho Kuk of the Rebuilding Korea Party wrote on Facebook that the Democratic Party was deferring the crypto tax for a fourth time and asked whether it wanted to become a “reform-deferring party.” That came even though one of his party’s lawmakers, Park Eun-jung, co-sponsored the Park Min-gyu bill. A Justice Party spokesperson called the move an inconsistency between words and actions and hypocrisy, the paper said.
The paper also described a split inside the Democratic Party. Some members argued that the tax should go ahead to protect policy credibility, while others said the collection infrastructure was not ready.
What it means for Korean traders
The tax has slipped repeatedly since 2020. It was first due in 2022, and an amendment passed in December 2024 pushed it to 2027. A final decision on this delay is expected after high-level consultations between the party and the government.
If the delay passes, Korean investors would keep trading on local exchanges such as Upbit and Bithumb without a capital gains charge for at least another cycle. Exchange operators would get more time to build reporting systems. We covered the tax’s original 2027 timetable and the number of investors affected in our earlier report on the 22% crypto tax.
The Digital Asset Basic Act, which the party now wants to pass before any tax applies, is still pending in the legislature. That puts the tax timetable behind a broader market structure law that has yet to clear committee.
FAQ
Is South Korea’s crypto tax cancelled?
No. The Democratic Party has asked the government to defer it. The 22% tax remains in the Income Tax Act and is scheduled to start on January 1, 2027, unless the law is amended.
How long would the delay be?
Kim did not give a period. Lawmakers on the finance committee have discussed about two years, and the Park Min-gyu bill ties the start date to the first CARF data exchange.
Who would pay the tax?
Individuals with annual gains above 2.5 million won from selling or lending virtual assets, taxed at 22% including local tax.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
