- South Korea expands crypto tax systems as lawmakers delay repeal discussions for 2027 rollout.
- New rules would tax crypto gains above 2.5 million won at an effective 22% rate.
- Current proposal bars loss carryforwards and offsets across crypto and other investments.
South Korea is moving ahead with preparations to introduce taxation on cryptocurrency income despite ongoing attempts to overturn the policy through legislation and a public petition. While the National Tax Service (NTS) has expanded its administrative framework and is developing tools to monitor digital asset transactions before the planned 2027 rollout, discussions on eliminating the tax remain on hold in the National Assembly.
Under the current Income Tax Act, income earned from the transfer or lending of virtual assets after Jan. 1, 2027, will become taxable. Investors will receive a basic annual deduction of 2.5 million won, with income above that subject to a 20% income tax. Including local income tax, the effective tax rate will be 22%.
As part of its preparations, the NTS recently established a Digital Assets General Division to oversee the taxation of virtual assets and tax source management. The agency is also building an integrated analysis system intended to combine transaction data submitted by cryptocurrency exchanges with blockchain transaction records.
According to the NTS, the planned system will support transaction analysis while introducing tracking programs intended to detect tax evasion and attempts to conceal assets through virtual currencies.
Repeal Efforts Await Parliamentary Action
Although preparations for implementation are progressing, legislative efforts to abolish the tax have yet to advance.
A petition calling for the abolition of virtual asset taxation collected more than 50,000 signatures in May before being referred to the National Assembly’s Finance, Economy, and Planning Committee. However, the committee has not scheduled a date to introduce or review the petition.
A committee official said no timetable has been established and noted that lawmakers must determine whether the petition should be considered alongside a separate amendment to the Income Tax Act or handled independently.
Tax Treatment Remains Central Issue
The current framework has also drawn attention due to differences in the taxation of virtual assets and domestic listed stocks.
Under the existing rules, most investors in listed domestic shares are not subject to capital gains tax unless they qualify as major shareholders. By comparison, an investor earning 10 million won in annual virtual asset income would pay 1.65 million won in tax after applying the 2.5 million won basic deduction and the 22% effective tax rate.
The current proposal also does not allow investors to carry forward losses from previous years or offset gains and losses across virtual assets and other financial investment products. As a result, an investor who records a 10 million won loss in one year and earns the same amount the following year would still owe tax on the latter gain because the earlier loss cannot be deducted.
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