South Korean Investors Seek Fourth Delay to Crypto Tax

South Korea plans to bring virtual-asset profits into its capital-gains tax regime, targeting annual crypto gains above 2.5 million won, or about $1,740. Gains exceeding the allowance would face a combined 22% levy, comprising a 20% national tax and a 2% local tax. The measure matters for retail investors and the competitiveness of South Korea’s large crypto market, while remaining a point of contention in the National Assembly.

The tax is scheduled to take effect on Jan. 1, 2027, unless lawmakers repeal it or approve another delay as the political battle moves through parliament. The debate comes as trading volume across South Korea’s five largest crypto exchanges has fallen 55% over the past six months, heightening concerns that the levy could further weaken domestic activity. Without new legislation, the 2.5 million-won threshold and 22% rate will take effect as planned.

South Korea had planned to impose a 20% tax, plus local income tax, on annual crypto-asset income exceeding 2.5 million won from January 1, 2025. The threshold was 20 times lower than the 50 million won tax-free allowance for financial investment income from stocks, drawing attention from about 13 million crypto investors.

A National Consent Petition seeking to abolish crypto-asset taxation surpassed the 50,000-signature threshold in July 2024. Under South Korean National Assembly rules, the petition will be formally reviewed by the Strategy and Finance Committee, which will reconsider the 2.5 million won exemption, the disparity with stock taxation and whether the system should take effect as scheduled.