- South Korea’s government has proposed delaying cryptocurrency taxation until 2029, marking the fourth postponement.
- The proposed tax includes a 22% levy on annual crypto gains exceeding 2.5 million won.
- The government wants to introduce loss carryforward provisions and align taxation with international reporting standards.
Government Proposes Another Tax Delay
South Korea looks set to delay the introduction of crypto taxes for another two years, pushing back the scheduled introduction to January 2029, which will be the fourth time the process has been delayed.
Source: mofe.go.kr
Finance Minister Lee Hyoung-il said on Thursday the government will seek input on the issue from lawmakers. Investors will be taxed 22 percent of any crypto capital gain above 2.5 million won ($1,860) every year, with an additional 2 percent local levy.
However, the government thinks that if the tax is introduced prior to a full information sharing framework with the international community South Korean investors and businesses could be at a disadvantage.
International Framework Puts Investors At A Disadvantage
One of the main reasons the tax is looking to be delayed is due to an international framework known as the Crypto-Asset Reporting Framework (CARF).
South Korea expects the information sharing procedures to kick in with the US in 2029. By bringing the local tax into line with this date it will help to form a fairer system, officials think.
The government is also looking at allowing investors to offset tax losses with crypto for three years. This means investors can utilise losses they incur in one year to reduce future gains over the next three years.
This will be included within tax system ammendments in 2027 during Parliament’s regular session. Full guidelines will also be issued in the first half of 2028.
Fourth Time The Tax Has Been Delayed
South Korea initially planned to introduce taxes on crypto in January 2022 but has since been delayed multiple times. First to 2023, then 2025 and finally 2027.
The government had previously said that the tax will be introduced as planned in 2027. However, after recently announcing the delay, an official at the Finance Ministry said in May that the tax will be introduced as planned in 2027.
However, there had been talks between government officials and large crypto exchanges. Industry representatives have expressed concern around uncertainty with tax rules for varying types of transactions, and also how long it will take to establish systems.
The latest proposal shows that South Korea want to create a more structured tax system before taking taxes from crypto investors. The final decision will come down to talks with lawmakers and if they approve the changes.
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