South Korea Reviews Another Delay to Crypto Tax, Ties 2029 Start to U.S. Data Swap

South Korea’s presidential office is weighing a fourth delay to the 22% levy on crypto profits, and a 2029 effective date is picking up backing from both legislators and industry groups.

The tax is set to go into effect on January 1, 2027. The presidential office says it is discussing a postponement with government bodies, pointing to gaps in the regulatory framework and the difficulty of applying the same rules to domestic and foreign transactions, as Newsis reported.

The tax stems from a 2020 change to the Income Tax Act. It charges a 20% national rate and a 2% local rate on yearly earnings from transferring or lending virtual assets, after a 2.5 million won ($1,888) deduction. Originally slated for 2022, the start was pushed to 2023, 2025 and 2027 after officials admitted that tax collection systems and investor safeguards were not ready.

The U.S. data problem

The case for 2029 hinges on the OECD's Crypto-Asset Reporting Framework, the mechanism that lets tax agencies share crypto transaction data. South Korea is in the initial wave of countries scheduled to start exchanging information in 2027. The U.S. will not participate until 2029.

An official at the presidential office told Newsis that missing U.S. trading data is the main obstacle. In its absence, the National Tax Service would have to pursue overseas transactions individually, placing domestic-exchange traders under a greater load than users of foreign platforms or self-custody.

On October 16, Democratic Party lawmaker Park Min-gyu and 13 co-sponsors introduced a bill moving the tax to January 1 of the second year after the first cross-border data exchange, effectively 2029. People Power Party lawmaker Song Eon-seok submitted a separate measure to delete the crypto tax clauses from the legislation.

On Thursday, the Korea Digital Asset Business Association endorsed the 2029 timeline and urged the government to enact a digital asset law with investor protections on par with the stock market before any levy is applied.

A tax fight that has been building

Pressure has mounted from multiple fronts. Last week, two citizen petitions — one calling for repeal and one for a two-year delay — each passed the 50,000 signature threshold that requires legislative review. Democratic Party leader Kim Min-seok called for a “thorough final review,” marking a reversal for a party that had previously held firm on 2027.

On Thursday, Finance Minister Lee Hyeong-il told a parliamentary audit that the government would decide “after carefully considering and gathering all opinions from the industry and the National Assembly.” That same day, Financial Services Commission chairman Lee Eog-weon stated the tax should “take various circumstances into full consideration.”

The Virtual Asset User Protection Act went into force in July 2024, but the Digital Asset Basic Act — the licensing framework tied to spot bitcoin ETF approval — has not been enacted. Legislators have raised doubts about taxing a market before the legislation that defines it is in place.

The National Tax Service, meanwhile, continues moving forward. It intends to release a draft notice on taxable crypto income by the end of October. The government expects to finalize its stance through inter-agency discussions after audits conclude, with a decision to come via National Assembly tax amendments between late November and early December.