South Korea is set to begin taxing cryptocurrency income on Jan. 1, 2027, after years of delays. According to CoinDesk, the country plans to impose a 22% tax on crypto income, consisting of a 20% national tax and a 2% local tax, on the portion of annual income exceeding 2.5 million won, or about $1,740.
22% rate applies above 2.5 million won
Under the current plan, the tax would be imposed as “other income,” not as a capital gains tax in the conventional sense. The taxable scope covers income generated from the transfer and lending of cryptocurrencies, with an annual deduction of 2.5 million won. Only income above that threshold would be taxed.
The rate is set at 20% in national income tax plus 2% in local income tax, for a combined 22%. Because it is treated as “other income,” it falls into a different tax category from capital gains taxation on assets such as stocks.
Plan was first due in 2022 and delayed twice
The tax system was initially scheduled to take effect in January 2022. It was first postponed to 2025, then pushed back again to 2027 through a legal amendment in December 2024. Although the current timeline points to implementation next year, the issue remains contested, and the next stage of the fight has moved to the National Assembly.
Repeal bill has moved to a subcommittee
The opposition People Power Party has argued that the proposal lacks a loss carryforward mechanism and warned that investors could shift trading activity to overseas centralized exchanges and peer-to-peer markets as a result. South Korean Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol has said the tax will be introduced next year as planned.
Separately, a bill seeking to abolish the tax by removing crypto income from the Income Tax Act was sent to a subcommittee for review on July 29. If lawmakers do not repeal the measure or delay it again, the tax will take effect on schedule.