South Korea hears from crypto exchanges on tax, vows to review readiness

South Korea's government heard directly from crypto exchanges and experts on Oct. 20 about a tax on crypto income that is due to take effect in 73 days. First Vice Minister of Economy and Finance Kwon Dae-young held an on-site meeting on crypto taxation in Seoul that morning, where industry participants asked for clear tax standards and time to prepare their systems. Kwon stressed the principle that "where there is income, there is tax," while saying the government would comprehensively review how ready the country is. The ministry's announcement did not say whether the tax would go ahead or be delayed again.

Upbit's operator, other exchanges and academics at one table

According to a press release from the Ministry of Economy and Finance, the meeting ran from 9:30 a.m. to 11 a.m. KST at the PPS Hall of the Seoul Regional Public Procurement Service. The government side included the first vice minister, the ministry's director general for income and corporate tax policy, and the Financial Services Commission (FSC)'s director general for digital finance policy. From the industry came Dunamu (operator of Upbit), Bithumb, Digital X, Coinone and Streami (operator of Gopax), along with the Digital Asset eXchange Alliance (DAXA), an exchange industry group, and research firm Tiger Research.

The experts were Professor Park Hoon of the University of Seoul, Professor Choi Seung-jae of Sejong University, Professor Ahn Sung-hee of the Catholic University of Korea, and attorney Han Seo-hee of law firm Lee & Ko. The ministry said the meeting was meant to hear from the field and gather a wide range of views ahead of the tax's scheduled start on Jan. 1, 2027.

Industry asks for time, government holds to principle

The experts said the market and regulatory environment had changed significantly since the tax was written into law at the end of 2020, and that changes from the proposed Digital Asset Basic Act now under discussion in the National Assembly should also be taken into account. In his opening remarks, Kwon said that "with advances in technology, new transactions and services are emerging quickly in crypto, and cross-border transactions are becoming more active." In closing, he added that the government would "carefully consider the views raised today and consult closely with relevant ministries."

Presenter: "Delayed three times... a comprehensive roadmap is needed"

Park Hoon, who gave a presentation titled "Key issues in taxing crypto income," outlined the main points of debate, overseas cases and cross-border information exchange, and outlined the considerations for both implementing and further delaying the tax.

"Major countries such as the United States, the United Kingdom and Japan already tax crypto, but in South Korea implementation has been delayed three times since the tax system was created in 2020. We need to think about a comprehensive roadmap for implementing and firmly establishing a reasonable tax system."

Park Hoon, professor at the University of Seoul

Two weeks after a pledge to gather views at the parliamentary audit

Under the current Income Tax Act, income from selling or lending crypto is treated as "other income," and the amount above 2.5 million won a year is taxed at 22%, including local income tax. The tax was originally set to begin in 2022 but has been postponed three times and is now scheduled for Jan. 1, 2027.

At a parliamentary audit by the National Assembly's Finance and Economy Planning Committee on Oct. 6, Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il said the government would "broadly gather views from experts, the industry and other stakeholders, along with the various opinions raised in the National Assembly." According to SBS Biz, Lee also said there were "honestly parts that are very hard for us to gauge" regarding how much revenue the tax would bring in. The Oct. 20 meeting was the government's formal consultation two weeks after that answer.

Bills pending in the National Assembly include People Power Party proposals to push the start to 2029 or 2030, a bill from 14 lawmakers led by Park Min-kyu of the Democratic Party (submitted Oct. 16) that would delay it until two years after the first cross-border exchange of transaction data, and a bill to scrap the tax altogether. If the law is not changed, crypto income earned from Jan. 1, 2027 will be taxable. To move the start date, an amendment would have to pass the National Assembly and be promulgated before then.