South Korea Advances Crypto Tax System as Repeal Efforts Remain Stalled

Tax rules set for 2027

Under the current Income Tax Act, income from the transfer or lending of virtual assets earned after Jan. 1, 2027 is due to become taxable. The framework provides an annual basic deduction of 2.5 million won for investors. Any income above that threshold would be subject to a 20% income tax, and with local income tax included, the effective rate would reach 22%.

The measure means crypto-related gains would be brought into the tax system under rules that are already on the books, unless lawmakers later change them. For now, however, debate over repealing the tax has not produced a legislative shift.

National Assembly repeal push on hold

Attempts to overturn the tax have continued through both legislative channels and a public petition, according to the source report. But those discussions are currently stalled in the National Assembly, leaving the existing timetable in place.

That political standstill has not slowed administrative planning. Rather than waiting for the repeal debate to be resolved, the authorities appear to be working on the assumption that the current law will take effect as scheduled at the beginning of 2027.

Tax agency builds enforcement structure

As part of that preparation, the National Tax Service has created a new Digital Assets General Division. The unit is tasked with overseeing virtual-asset taxation and related tax source management.

The move indicates that the NTS is formalizing a dedicated structure for digital-asset oversight before the tax begins to apply. The source article says this expansion of the administrative framework is part of a broader effort to prepare for the rollout despite the unresolved political challenge.

Exchange and blockchain data to be combined

The NTS is also developing an integrated analysis system designed to bring together transaction data submitted by cryptocurrency exchanges and records from blockchain transactions. According to the agency, the system is intended to support transaction analysis while also introducing tracking programs.

Those tools, the NTS says, are meant to identify tax evasion and attempts to hide assets through virtual currencies. In practical terms, that would give the tax authority a more consolidated view of crypto activity as it readies enforcement under the upcoming rules.

The current picture in South Korea is therefore one of parallel tracks: a tax policy that remains legally scheduled for 2027, administrative work to make it enforceable, and a repeal effort that has yet to produce action in parliament. Unless the law is changed, income from qualifying crypto transfers and lending after the start date would fall under the new tax regime.