The South Korean government has postponed the implementation of its cryptocurrency taxation for the fourth time, setting a new start date of 2029. The decision, announced less than two months before the tax was due to begin, was made to address concerns that difficulties in tracking overseas transactions could disadvantage domestic investors.
Deputy Prime Minister and Minister of Economy and Finance Lee Hyoung-il stated, I announce with a heavy heart that following 3 previous delays, the tax will be postponed again.
The government cited a fairness issue with overseas exchanges as the primary reason. Data exchange on crypto assets with the U.S. is not scheduled to begin until 2029, and officials worry that taxing domestic exchange users while such information is unavailable would be inequitable. KBS News reported that the policy was originally announced in 2020 and has seen multiple delays since then.
Offsetting Virtual Asset Losses Against Gains
Along with the delay, the government plans to introduce carryforward loss deductions for virtual asset taxation. This new approach will allow investors to offset profits against losses over a three-year period, with taxation applied only to their net gains. For instance, if an investor loses KRW 45 million one year and earns KRW 50 million the next, the current system would tax the full KRW 50 million profit. With the new deduction, only the KRW 5 million net profit would be subject to tax, significantly reducing the tax burden.
Postponing Crypto Tax Implementation Again
This marks the fourth deferment of the crypto tax, which was originally set to be implemented in 2022. It was previously delayed to 2023, then to 2025, and most recently to 2027 before this latest postponement to 2029. According to a Financial Services Commission survey, the South Korean virtual asset market remains substantial, with over 11 million user accounts on domestic exchanges and a daily average transaction volume of KRW 3.1 trillion in the first half of this year, despite a recent decrease in trading activity.
Future Steps
According to the sources, the government will continue to revise the taxation standards during the additional delay period. Detailed taxation standards are expected to be drafted by the first half of 2028. The proposal for this latest delay is set to be discussed with the National Assembly for its approval.
