South Korea’s government said it will seek to postpone the taxation of crypto income by another two years, shifting the proposed start from January 2027 to 2029. If approved by lawmakers, it would be the fourth delay for a tax framework that was first legislated in 2020.

Deputy Prime Minister and Finance Minister Lee Hyoung-il said the government plans to work with the National Assembly on the change. The 2029 date is still only a proposal, not an enacted decision.

Why the government wants more time

Lee gave two main reasons for the proposed delay. First, the government said launching the tax before crypto transaction information sharing with the United States begins in 2029 could put the domestic market at a disadvantage. South Korea expects to start exchanging crypto-related tax data with the US that year under the OECD’s Crypto-Asset Reporting Framework.

Second, the government said more preparation is needed because the pending Digital Asset Basic Act could change how digital assets are defined and how service providers are regulated. Officials argue that introducing taxation before those rules are settled would complicate enforcement and compliance.

Relief for losses and tougher overseas oversight

Alongside the delay, the government outlined several tax measures meant to prepare the system for a later launch. These include allowing investors to carry forward losses on virtual assets and deduct them from gains for up to three years.

Officials also said they want to strengthen the tax framework for overseas transactions, expand tax-information exchange infrastructure, and publish more detailed tax standards before 2029. Lee added that a joint government-private working group on digital asset taxation will be created, while work on the Digital Asset Act is to be accelerated.

The finance minister said that once trading information can be obtained from the US, authorities should have enough data to tax investors who use US exchanges.

How the current tax plan would work

Before this latest proposal, earlier reports had pointed to January 1, 2027 as the expected start date, with first filings in May 2028. A ruling-party bill had also sought to move the tax to 2029, and the government has now publicly backed that direction.

Under the current structure, crypto gains above KRW 2.5 million a year would be taxed at 22% in total, consisting of 20% national income tax and 2% local tax. If the National Assembly approves the new delay, the filing schedule would move back as well.

Debate over predictability and next steps

The latest move has revived criticism that repeated delays weaken the predictability and credibility of tax policy. The issue has remained politically sensitive after three earlier postponements, with debate focusing on fairness, market readiness, and whether enforcement tools are sufficient.

At the same time, regulators are reviewing security at exchanges and pursuing broader measures to tighten controls and assess crypto-related risks across banks and brokerages. The next confirmed step is legislative: the government can propose the postponement, but lawmakers must approve it before the start date is formally changed.

Source: www.blockhead.co