Breaking: South Korea Confirms Crypto Tax Starts in 2027 with 22%

South Korea has officially ended years of uncertainty over its crypto tax policy. Starting 1 January 2027, investors will pay tax on crypto profits under new government rules. 

The decision will directly affect more than 13 million crypto investors across one of the world’s largest digital asset markets.

South Korea Ends Years of Crypto Tax Delays

South Korean Deputy Prime Minister and Finance Minister Koo Yun-cheol confirmed during a National Assembly Strategy and Finance Committee session that the long-postponed crypto tax will begin as planned in 2027.

“At present, we are proceeding with the plan to begin taxation on virtual assets next year as scheduled.”

Koo also noted that the government is not planning to allow crypto loss carryforwards at launch because similar rules do not currently apply to stock investment losses. 

However, he said authorities could review the issue after the system begins.

How the New Crypto Tax Will Work

Under the new rules, investors will pay tax only on annual cryptocurrency gains exceeding 2.5 million Korean won (approximately $1,800). 

Any profits above that threshold will be taxed at 22%, comprising a 20% national income tax and a 2% local income tax.

The government will also classify income from crypto trading and lending as “other income” rather than financial investment income. 

Although the tax was initially scheduled to take effect in 2021, it was repeatedly delayed due to industry concerns and political pressure. With the new framework now set to move forward, the government has said it may refine the rules after implementation if necessary.

Major Concerns and Criticisms Over New Rules

The announcement has already triggered debate across South Korea’s crypto industry. 

One major concern is that traders could move their activity to overseas exchanges to avoid higher tax costs. As South Korea is one of the world’s largest retail crypto markets, analysts warn the new rules could reduce local trading volumes.

Another criticism is the tax threshold itself. Crypto investors will be taxed after earning 2.5 million won, while many stock investors continue to enjoy more favorable capital gains treatment.

The Digital Asset eXchange Alliance (DAXA) also warned that stricter anti-money laundering reporting rules could overwhelm exchanges. 

It estimates annual suspicious transaction reports could jump from around 63,000 to nearly 5.4 million once the rules take effect.

What Next?

Although the tax becomes effective on Jan. 1, 2027, investors will submit their first tax filings in May 2028.

Before then, South Korea’s National Tax Service will publish detailed compliance guidelines with major exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax.

Meanwhile, the opposition People Power Party has proposed legislation to scrap the crypto tax entirely. However, unless lawmakers approve another delay or repeal, South Korea’s crypto tax is set to take effect in 2027.