South Korean stakeholders plead for fourth extension of crypto tax regime starting 2027

Over 50,000 citizens have signed a petition asking lawmakers to postpone South Korea’s crypto income tax by two more years. 

The petition has passed the required number of signatures for a parliamentary review, but for now, the government levy is still set to be imposed in January 2027.

Why do South Korean citizens reject the crypto income tax? 

Citizens filed an appeal against South Korea’s incoming crypto income tax on the National Assembly’s electronic petition portal on August 21. The petition had gathered 51,004 signatures by the morning of September 14, which was about three weeks. 

Typically, appeals that gather above 50,000 verified signatures within 30 days are automatically sent to the relevant standing committee, in this case, the National Assembly’s Strategy and Finance Committee, which handles income tax law.

However, this referral does not force a change. The committee can only consider both the petitioner’s case and the government’s position to decide if a law needs amending. 

There was an earlier attempt in May to get rid of the tax completely instead of just postpone it that hit 50,000 signatures in eight days, was referred, and then went nowhere.

If nothing changes, the tax law will go into effect on January 1, 2027 and profits from selling, transferring, or lending digital assets will be treated as miscellaneous income and charged a 22% tax rate. 

It includes a 20% national plus a 2% local surcharge, on annual gains above a 2.5 million won ($1,860) deduction. Income earned in 2027 would first be reported and paid in May 2028.

How much would the crypto income tax make for South Korea? 

The petitioner stated that taxing the finances of exchanges would not raise much. For instance, Upbit operator Dunamu disclosed that it was hit with approximately 22.6 billion won (~$17 million) in additional taxes following a National Tax Service audit. 

The petition also said about 700 trillion won ($520.5 billion) in crypto-linked funds moved offshore over five years. 168 trillion won moved last year alone, with roughly 5 trillion won a year going to overseas exchanges in fees. 

Taxing now, the petitioner wrote in a translated statement, would take away a “wealth ladder” for young people in the country who make up about half of Korea’s crypto investors.

The Digital Asset eXchange Association (DAXA) told lawmakers this month that exchanges lack a standardized data network with regulators and need more time to build and test the plumbing. 

Officials like Lee Hyoung-il, the nominee for deputy prime minister and finance minister, are still pushing for the tax. Lee said in written answers submitted to the committee on Sunday that it is “desirable to implement the tax as scheduled.”

He said that it was “appropriate” to classify crypto gains as miscellaneous income and said the National Tax Service will publish detailed standards through a public notice before year-end. Lee faces a confirmation hearing on Tuesday.

Meanwhile, Opposition People Power Party lawmakers have filed competing bills. Rep. Song Eon-seog wants the tax clauses deleted, Rep. Jung Sung-kook has proposed pushing the start to 2030, and Rep. Kim Sang-hoon filed a separate amendment for a 2029 date.