Korea weighs fourth crypto tax delay

The ruling Democratic Party (DP) will meet with the heads of Korea’s major cryptocurrency exchanges to weigh another delay to the planned crypto tax, following concerns that the levy could disproportionately affect users of domestic platforms.

The DP will consult executives from the country’s five leading cryptocurrency exchanges, including Dunamu and Bithumb, on Friday morning to examine whether the industry is ready for the tax and what challenges remain before a final decision.

The cryptocurrency tax was originally scheduled to take effect in 2022 but has been postponed three times — first to 2023, then to 2025 and finally to 2027.

Under the upcoming tax framework, individuals will pay a 22 percent tax, including local income tax, on annual income above 2.5 million won ($1,870) from selling or lending cryptocurrencies.

“The meeting was arranged on short notice,” an industry source said. “Another delay in taxation carries considerable political pressure, so the party appears to want to hear from the industry and make the case for a postponement. We were asked to speak candidly about the challenges that we face.”

DP lawmakers serving on the National Assembly’s Finance, Economy, Planning and Budget Committee will also attend the meeting.

Under the Income Tax Act, any delay in the crypto tax would require approval from the parliamentary finance committee’s taxation subcommittee.

But lawmakers remain divided over the proposal.

A meeting between the committee and the Ministry of Finance and Economy on Wednesday ended without consensus on deferring the tax.

“The government appears to have settled on postponing the tax, but there is still considerable disagreement within the Finance, Economy, Planning and Budget Committee,” an official on the DP’s policy committee said. “The meeting [on Friday] is intended to gauge the industry’s response to the discussions between the government and the party and broaden the consensus on a delay.”

The ruling party and the government have seemingly moved to postpone the tax again due to concerns about the lack of a comprehensive legal framework for digital assets and opposition from younger cryptocurrency investors, who question whether authorities can reliably determine the acquisition costs of cryptocurrencies purchased through overseas exchanges or obtain sufficient foreign transaction data. Taxing investors under those conditions could place a disproportionate burden on users of Korean exchanges.

The meeting is expected to focus on ensuring fair taxation across domestic and foreign platforms and building the IT systems needed to submit tax records.

The DP also plans to use the meeting to build consensus within the party and set the terms for another delay. It will examine whether related taxation should begin in 2028 or take effect alongside the pending “Digital Asset Basic Act” (translated). The party will consider the time required to collect overseas transaction data and means to improve exchanges’ computer systems.

“We intend to make a decision at high-level talks between the ruling party and the government in November,” a policy committee official said.

BY KWEN YU-JIN [[email protected]]