South Korean ruling party bill would delay crypto tax until two years after data exchange

Fourteen South Korean lawmakers led by Park Min-kyu of the ruling Democratic Party submitted a bill to the National Assembly on Oct. 16 that would push back the start of the country's tax on crypto income. Under current law, the tax takes effect on Jan. 1, 2027. The bill would instead start it on Jan. 1 of the second year after the year in which crypto transaction data is first exchanged between countries. The proposal follows deferral and repeal bills from opposition People Power Party lawmakers, marking a similar push to delay taxation from lawmakers in the ruling party.

Start date tied to two years after the first data exchange

According to the National Assembly's bill information system, the bill (No. 2221923) is backed by Park and 12 other Democratic Party lawmakers, plus Park Eun-jung of the Rebuilding Korea Party. It sets the effective date as Jan. 1 of the second year after the year containing the date on which crypto-asset transaction data is first exchanged under Korea's Adjustment of International Taxes Act. It would also move the base date used to calculate acquisition cost, along with the effective dates and applicability rules of related provisions.

The data exchange refers to the Crypto-Asset Reporting Framework (CARF) of the Organisation for Economic Co-operation and Development (OECD), under which national tax authorities share transaction data on users of their domestic exchanges with one another. Korean media reported that Korea's first exchange is scheduled for 2027, meaning the tax would in effect start on Jan. 1, 2029, if the bill passes.

2027, 2029 or 2030: three start dates before parliament

The crypto tax provisions were added to Korea's Income Tax Act in December 2020. Income from selling or lending crypto assets is treated as "other income" and taxed separately from the taxpayer's other earnings. Implementation has been postponed three times and is now set for Jan. 1, 2027. Annual income above 2.5 million won would be taxed at 22%, including local income tax. The main amendments now before the National Assembly are as follows.

Kim Sang-hoon's bill was taken up at a full meeting of the National Assembly's Finance, Economy and Planning Committee on Sept. 28 and referred to a subcommittee. Kim Jae-sub's bill would delay the tax to 2030 and add a new provision requiring crypto businesses to give users the data needed to calculate their taxable income. As of Oct. 18, no standing committee had been assigned to Park Min-kyu's bill.

The same argument: no data from offshore exchanges

In the bill's statement of reasons, Park said transaction data on users of domestic exchanges is relatively easy to obtain, but it is difficult to obtain sufficient tax reporting data for transactions on overseas exchanges, including those in the United States, until CARF is fully up and running. That gap could concentrate the tax burden on users of domestic exchanges and undermine fairness, the bill said. It cited the fact that the United States is scheduled to begin participating in CARF in 2029 as grounds for moving the start date.

"It is reasonable to implement crypto-asset taxation after the Digital Asset Basic Act, which lays the basic institutional framework for the crypto-asset market as a whole, has been put in place first."

Statement of reasons, Income Tax Act amendment led by Rep. Park Min-kyu

Kim Sang-hoon's bill likewise said the infrastructure to track trades outside Korea's centralized exchanges, such as on decentralized exchanges (DEXs), peer-to-peer (P2P) trading and decentralized finance (DeFi), is still lacking. It also said taxing crypto investors first is unfair when small shareholders who sell listed shares pay no capital gains tax. Song Eon-seok's bill would scrap the crypto income tax altogether, arguing that it should go the way of the financial investment income tax, which has been abolished.

75 days left if nothing changes

If the law is not amended, crypto income earned from Jan. 1, 2027, will be taxable. That is 75 days away as of Oct. 18. To change the effective date, an amendment must clear committee review and a plenary vote and be promulgated before then.