South Korea's ruling party wants to delay its crypto tax again

South Korea’s ruling Democratic Party wants to delay a tax on cryptocurrency gains by two more years, which would be the fourth postponement.

Democratic lawmakers on the National Assembly’s Strategy and Finance Committee agreed on Nov. 3 to recommend the deferral to party leadership, local media reported. The tax, on what Korea calls virtual assets, is due to take effect in January 2027.

“While we agree with the basic tax principle that income should be taxed where it arises, the majority view was that, given various policy circumstances, it would be unavoidable to allow a period of preparation before implementation,” said Oh Gi-hyoung, the party’s secretary on the committee. “Most people seem to be talking about around two years.”

Two things seem to be driving the push to delay again. The first is timing. An international system for exchanging crypto tax information is due in 2029. The report doesn’t name the system but it could be OECD’s Crypto-Asset Reporting Framework, approved in 2022 and finalized for global rollout in 2023. Under this phased framework, while dozens of early adopter countries began collecting data in 2026 for a 2027 exchange, the United States is not scheduled to join the system until 2029.

The second is the General Act on Digital Assets, also referred to by policymakers as the Digital Asset Framework Act or Basic Act. This act could be in the first half of 2027, Oh said.

In addition, the party wants to test how tax data can be shared between the National Tax Service and exchanges, and to run tax simulations using real transaction data. It will include the tax deferral when it discusses amendments to the Income Tax Act at a future meeting of the Tax subcommittee.

Under current law, crypto profits above 2.5 million won face a 20% tax from Jan. 1, 2027, plus a 2% local levy. The tax was first due in 2022 and has been postponed three times, the Korea Times reported. Finance Minister Lee Hyoung-il has backed starting on schedule, while the exchange group DAXA has asked for a delay.

The General Act on Digital Assets, also called the Digital Asset Basic Act, would set rules for stablecoins and exchanges. As of late July it was still being drafted, with ten bills pending in the Assembly and disputes over whether banks should control issuers of won stablecoins, according to compliance firm Sumsub.

Elsewhere in Asia, Japan is heading the other way. Local media have reported it is drafting a flat 20% tax on crypto gains, down from rates of up to 55%, alongside a securities-law reclassification of tokens.

Hong Kong and Singapore already run licensing regimes for crypto platforms.