South Korea is leaning toward postponing its tax on cryptocurrency gains until 2029, which would be a fourth delay for a levy currently due to start in January, according to a Newsis report.
The presidential office is inclined toward a delay amid concerns that the tax burden would fall largely on users of South Korea-based exchanges, because authorities would struggle to track activity on U.S. platforms, the report said, citing unidentified officials.
"Almost half of the crypto market is the U.S.," an official told the news outlet, describing the lack of U.S. tax data as the biggest obstacle.
A shift from July
The discussions mark a change from the government's position in July, when Deputy Prime Minister Koo Yun-cheol told lawmakers the tax would take effect in January 2027. Koo has since been replaced by Lee Hyung-il, who told lawmakers at an Oct. 6 parliamentary audit that he would gather views from parliament, experts and industry.
Terms of the proposed levy
Under the current rules, annual net income from crypto transfers or lending would be taxed at 20%, or 22% including local income tax, after a 2.5 million won ($1,887) deduction. The National Tax Service still lists Jan. 1, 2027, as the start date.
Data-sharing timetable
The concern stems from differences in when countries will begin sharing crypto trading data under the OECD's Crypto-Asset Reporting Framework (CARF).
- South Korea, Japan and the U.K. are due to begin exchanging data in 2027.
- Singapore, Switzerland and Hong Kong are set to follow in 2028.
- The U.S. will not start until 2029, according to the OECD's timetable.
The U.S., U.K. and Japan already tax crypto without waiting for cross-border data exchanges. The South Korean government had previously argued it could track offshore holdings through foreign financial account reporting.
The parliamentary path
Ruling Democratic Party lawmaker Park Min-kyu has proposed moving the tax's start date to Jan. 1, 2029, according to local media. The levy was first scheduled for 2022, and a fourth delay would require parliament to change the law. A final decision is expected by early December.
