South Korea's planned 22% tax on cryptocurrency income could be delayed for a fourth time after officials in the presidential office backed pushing its implementation back by two more years. Seoul Economic Daily reported the discussions on Oct. 25, citing incomplete collection preparations and concerns over enforcement. The proposed delay would move the levy's start date from January 2027 to January 2029, though the government has not finalized the decision and parliamentary approval remains necessary before any change can take effect.

Presidential Office Moves Toward Another Delay

A presidential office official said on October 25 that discussions had shifted toward postponing the tax, according to Seoul Economic Daily. The office has not announced a final decision. Government and ruling-party representatives plan to hold consultations before lawmakers formally consider amendments to the Income Tax Act.

South Korea introduced the tax provisions in 2020 and originally planned to begin collecting the levy in January 2022. Authorities subsequently moved the start date to 2023, then to 2025, and finally to 2027. Another change would mark the fourth postponement of the country's cryptocurrency income tax since the provisions were first legislated.

Government officials have cited gaps in collection preparations and concerns among younger investors. Government data counted 11.175 million domestic accounts with cryptocurrency trading access at the end of June, according to financial authorities. An investor petition against the 2027 start date reached 50,000 signatures and qualified for legislative review in September. The debate has also been shaped by meetings between finance authorities and cryptocurrency industry representatives over the rules that exchanges and investors would be required to follow.

How the 22% Crypto Tax Would Work

The current law sets a combined rate of 22% on qualifying annual income from selling, transferring, or lending virtual assets. The total consists of a 20% national income tax and a 2% local income tax. Investors would first subtract a basic allowance of 2.5 million won from their annual taxable gains.

Under that formula, an investor with 5 million won in qualifying annual gains would owe 550,000 won in taxes. The tax would apply only to gains above the allowance rather than to the full value of an investor's cryptocurrency holdings. Gains that fall at or below the 2.5 million won allowance would leave no taxable amount above the deduction.

Tax authorities have also examined how to calculate income involving staking rewards, airdrops, and decentralized finance transactions, while exchanges have sought clearer guidance on reporting requirements and transaction records. At an October 20 meeting, finance officials gathered feedback from representatives of five major exchanges, with discussions covering practical questions about calculating taxable gains across different transactions. The government had previously maintained the January 2027 start date in its August tax reform plans before fresh calls for postponement gained support.

Overseas Transaction Records Raise Fairness Questions

Access to overseas trading data has become a central issue in the discussions. South Korean authorities can gather records from domestic platforms, but transactions executed through foreign exchanges present additional reporting challenges. Officials worry that domestic exchange users could face stricter enforcement than investors who trade abroad.

The government has linked those concerns to the Crypto-Asset Reporting Framework, known as CARF, an international system that enables tax authorities to exchange information about cryptocurrency users' residence and transactions. South Korea expects international exchanges of the relevant information to begin in 2027. The United States, however, plans to participate in CARF from 2029, leaving a gap between South Korea's current tax start date and American participation. The government has also yet to complete legislation establishing a broader framework for digital assets.

Parliament Weighs Implementation in 2029

Democratic Party lawmaker Park Min-kyu introduced an Income Tax Act amendment on Oct. 16 that would postpone cryptocurrency taxation until January 2029. Twelve additional Democratic Party lawmakers and one Rebuilding Korea Party lawmaker supported the legislation. The bill's proposed start date would coincide with the timeline under which the United States plans to participate in CARF. Opposition People Power Party lawmakers have also backed postponement, citing administrative and investor concerns, though lawmakers have expressed differing views about the broader taxation framework. Democratic Party lawmaker Yoon Hou-duck previously questioned the repeated delays after successive government promises to prepare collection systems.

The National Assembly's tax subcommittee plans to begin reviewing pending legislation on Nov. 2. The crypto tax proposal will face further consideration alongside the government's wider tax reform package. Parliament must approve any amendment before the statutory January 2027 implementation date can be moved. Until then, the existing law remains unchanged, despite growing political support for a further delay.