South Korea's ruling Democratic Party has formally proposed delaying the country's income tax on cryptocurrency gains, which is currently scheduled to take effect on Jan. 1, 2027. Party leader Kim Min-seok presented the proposal at a supreme council meeting held at the National Assembly, and his comments were reported on Wednesday by local news outlet News1. If the government approves the plan, it would be the fourth time the levy has been pushed back since lawmakers first passed it in 2020 — a tax that has yet to take effect. Because the levy has never come into force, approving another delay would extend the status quo for South Korea's crypto market rather than introduce anything new.

Law Before Tax

Kim said party members had agreed on a clear order of steps: the country should pass the Digital Asset Basic Act before any crypto tax takes effect. The Digital Asset Basic Act is a planned legal framework intended to set broad rules for cryptocurrencies in South Korea. Kim argued that companies and investors need time to adjust once those new rules are in place. The sequencing ties the levy's fate to a separate piece of legislation: under the party's plan, the Basic Act's passage is a precondition before any crypto gains are taxed.

The decision came after several rounds of talks. Kim said the party consulted through the Strategy and Finance Committee, held talks with the government, and met with crypto asset businesses before finalizing the proposal.

How the Tax Would Work

Under the current plan, the tax would apply to yearly gains from transferring or lending crypto assets. The rate would be 22%, a figure that includes local tax. Investors would be taxed only on gains above a basic deduction, which is set at 2.5 million won, or about $1,868.7. On that basis, an investor whose annual crypto gains fall below the 2.5 million won threshold would owe no tax at all, while any gains above that amount would be taxed at the full 22% rate. Both the 22% rate and the 2.5 million won deduction are part of the tax design as it currently stands.

A Promise of a Firm Timeline

Kim acknowledged that the tax has been delayed several times before and said the party would set a clear deferral period this time. He also laid out tasks that must be completed before the tax can begin. These include making use of overseas transaction information and verifying the IT systems that would handle the tax administration. Taxpayer guidance is also on the list of prerequisites, and Kim said the party would prepare these items thoroughly during the delay. Taken together, the list amounts to an operational readiness checklist that, under the party's plan, would have to be completed before the levy takes effect.

The proposal does not change the law on its own. The current start date of Jan. 1, 2027, remains in place unless the delay is approved.

A Possible Push to 2029

Last week, South Korea's presidential office was reportedly discussing pushing the tax back to 2029 — two years later than the currently scheduled start date. The reported 2029 timeline is tied to the United States: it would line up with when the U.S. plans to join the OECD's Crypto-Asset Reporting Framework. That framework is designed to let tax authorities in different countries share information about crypto transactions, and Kim's mention of overseas transaction information as a prerequisite connects directly to this type of cross-border data sharing. Under the reported scenario, the levy would take nearly a decade to move from its 2020 passage to actually taking effect.

With the ruling party's formal proposal now on record, the decision on a fourth delay moves forward. The government has not yet announced final approval of the deferral, leaving the levy's scheduled start date unchanged for now. From here, the markers to watch are the government's decision on the deferral, the firm deferral period Kim promised to set, progress on the Digital Asset Basic Act, and any confirmation of the reported 2029 scenario.

This article was originally reported by Blockonomi.