Two-Year Delay for Crypto Tax Approved

South Korean regulators have decided to postpone the implementation of a 20% cryptocurrency tax until 2027. This decision follows the rejection of a proposal from the Democratic Party (DP), which sought to raise the annual tax threshold from 2.5 million won to 50 million won.

According to local news outlet Money Today, Park Chan-dae, leader of the DP, announced in a press conference that his party had agreed with the government’s proposal to delay the tax. Originally planned for 2025, the tax law has now been pushed back by two years.

Need for Comprehensive Preparations Before Implementation

Park stated that the government requires additional time for institutional preparations to systematically implement the crypto trading tax.

“After in-depth discussions, we believe further institutional restructuring is necessary before taxing virtual assets,” said Park.

The fate of the tax law will be decided during a vote by the National Assembly, scheduled for December 2, 2024, with both major political parties already agreeing to the delay.

Democratic Party vs. Government Proposal

Initially, the Democratic Party opposed the People Power Party’s (PPP) plan to delay the tax and insisted on implementing it in January 2025. Additionally, the DP proposed increasing the tax threshold to 50 million won (35,633 USD), but the government rejected this suggestion. Instead, it endorsed the PPP’s proposal to push the tax deadline to 2027.

Park also noted that negotiations are ongoing for several related laws, including those on inheritance and gift taxes. This indicates that the current 2.5 million won (1,781 USD) threshold could still be revised.

Third Postponement of the Tax Law

This marks the third delay of the virtual asset tax law. Initially introduced in December 2020, the law was first planned for implementation in 2021. It was later postponed to 2025 and now faces another delay until 2027.

The law is set to impose a 20% tax and an additional 2% local tax on profits exceeding 2.5 million won. Some major cryptocurrency exchanges have argued that this low threshold could significantly reduce trading volumes and have called for it to be increased.

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