South Korea May Delay Cryptocurrency Tax for the Fourth Time

In South Korea, there is a discussion about the possibility of a fourth delay in the introduction of the cryptocurrency tax, which could postpone its implementation until 2029. Currently, the tax is set to come into effect on January 1, 2027. It proposes taxing annual cryptocurrency profits above 2.5 million won (approximately $1,888) at a rate of 22%, which includes a 20% income tax and a 2% local tax.

However, legislators and representatives of the crypto industry oppose the introduction of the tax, pointing to the country's insufficient readiness for its implementation. The main issue is that the government will not be able to effectively monitor cryptocurrency transactions on foreign exchanges. If the tax is introduced without a functioning international reporting system, it will put South Korean crypto exchanges and their users at a disadvantage.

The cryptocurrency tax was first approved in the country in 2020, with plans to introduce it in January 2022. Since then, its implementation has been postponed three times: first to 2023, then to 2025, and finally to 2027. Now, it seems it may be delayed once again, until 2029.

Earlier this month, Democratic Party lawmaker Park Min-kyu proposed a bill linking the introduction of the tax to international information exchange agreements. According to the bill, cryptocurrency taxation will be postponed for two years after the first exchange of transaction information under the OECD's Crypto-Asset Reporting Framework (CARF). CARF is designed to allow tax authorities to track cross-border crypto transactions. The US will join the system in 2029, and there are concerns that until then, South Korean authorities will not be able to obtain data on transactions on American platforms.