The 22% rate on annual gains above 2.5 million won is unchanged, and the National Assembly has to amend the Income Tax Act before January for the delay to take effect. The ministry also proposed letting investors carry losses forward for three years, which current law does not allow.
South Korea's finance ministry proposed on Thursday delaying the start of the country's tax on crypto gains from January 1, 2027 to 2029. Finance Minister Lee Hyoung-il announced the plan at a briefing in Seoul, and it would be the fourth postponement since the tax was written into law in 2020 for a 2022 start. The terms of the tax are unchanged: 22% including local income tax, charged on annual gains above a 2.5 million won deduction, or about $1,860.
Nothing takes effect without the National Assembly. The Income Tax Act sets January 1, 2027 as the start date, and the Assembly has to amend it before January for the delay to apply. The government said it will ask for both the postponement and a new loss provision in the Assembly's current regular session, according to the Korea Herald's account of the briefing. Until that passes, the 2027 date stands in law.
The loss provision is the part of the proposal that changes how the tax would work rather than when it starts. Investors would be able to carry losses forward for up to three years to offset later gains, so a loss realized in 2029 could reduce taxable gains through 2032. Losses realized before the tax takes effect would not qualify. Current law allows only same-year offsets, which means an investor can owe tax on a profitable year after losing money in the year before it.
The ministry's stated reason for the date is a data problem rather than a rate one. South Korea expects to start receiving crypto transaction records from the United States in 2029 under the OECD's Crypto-Asset Reporting Framework, and Lee said that once that information arrives, people trading on US exchanges can be taxed on the same basis as those using domestic platforms. Exchanges have also told the government that they do not always hold purchase prices for tokens a customer bought abroad and later transferred in, and the purchase price is what decides how much of a disposal counts as gain.
That reasoning is close to the argument made by a bill already before the Assembly. Fourteen lawmakers proposed in October replacing the fixed start date with one tied to the first exchange of data under the same OECD framework, which would have left the delay open-ended rather than naming a year. The ministry's version fixes 2029 instead, whatever the data timetable does.
Each of the previous postponements moved the date by two or three years. The tax was legislated in 2020 to begin in 2022, then pushed to 2023, then to 2025, and then to January 2027. A 2029 start would put it seven years behind the schedule the statute originally set.
The sequence this week was short. Democratic Party of Korea leader Kim Min-seok proposed the two-year delay on Wednesday and the government accepted it the following day, Seoul Economic Daily reported. Lee acknowledged at the briefing that it is the fourth time the start has moved.
Two review timetables sit behind the 2029 date. A working group of officials, industry representatives and outside experts will examine how particular transaction types should be taxed and how filing should work, running through the first half of 2027, with detailed guidelines planned for the first half of 2028. If that review finds further legislation is needed, those amendments would go to the Assembly's 2027 regular session rather than this one.
The ministry also said it will work with the Financial Services Commission on the digital asset legislation now in progress, and gave that legislation as another reason for the later start, since rules still being written could require the tax framework to be adjusted. The Bank of Korea has taken its own position in that debate separately, telling lawmakers in October that it would not run stablecoins itself.
For investors the practical effect of the proposal, if the Assembly passes it, is that gains realized in 2027 and 2028 would fall outside the tax, and that losses taken in those years would not count toward the carryforward when it begins. The threshold and the rate would be the same in 2029 as they are written now.
