South Korea Postpones Cryptocurrency Capital Gains Tax to 2027
South Korea has postponed the introduction of its cryptocurrency capital gains tax by two years, now set to take effect in 2027 instead of January 2025. This decision follows an agreement among lawmakers amid political challenges and market concerns.
Park Chan-dae, floor leader of the Democratic Party of Korea, confirmed the moratorium, stating, “We have decided on a two-year moratorium for the cryptocurrency tax proposed by the government.” Earlier disagreements existed, with some parties suggesting alternative solutions like increasing tax-deductible thresholds rather than delaying the tax.
The People’s Power Party had initially proposed a delay until 2028, while the Democratic Party advocated raising the tax-free limit from 2.5 million won to 50 million won. Ultimately, both parties agreed on the 2027 implementation date to further evaluate the tax's impact and provide crypto traders additional time to adapt.
Once enacted, South Korean investors will incur a 20% tax on profits from cryptocurrency trading. The government had previously intended to implement the tax in 2021 but postponed it multiple times due to concerns over negative effects on the local cryptocurrency market. The delays highlight the government's cautious regulatory approach toward this emerging sector.
Park also noted that while they agreed to delay the cryptocurrency tax, their party opposes reforms to inheritance and gift tax laws benefiting wealthier citizens, which include reducing the inheritance tax rate from 50% to 40% and increasing deduction thresholds for beneficiaries.
This latest delay allows both the government and the crypto industry to assess the implications of taxing digital asset gains. Traders now have until 2027 to prepare for the eventual implementation, enabling them to adjust without undue disruption.