Crypto Tax on Ice: South Korea Defers 20% Levy Until 2027

Originally planned for 2022, South Korea's much-anticipated 20% tax on yearly cryptocurrency profits above 2.5 million won has been delayed once more, this time to January 2027. Recurrent delays show profound political differences, bureaucratic obstacles, and strong opposition from a mostly under-40 investor base. Lawmakers from both the ruling People Power Party and the opposition Democratic Party agreed that the current tax‐tracking infrastructure, notably for offshore trading platforms, is ill‐prepared for immediate enforcement.

A compromise meant to improve the regulatory structure and avoid unexpected market distortions causes the most recent two-year delay. While industry players caution that hurried adoption may drive trading offshore, policymakers highlight the necessity of matching national legislation with the OECD's forthcoming Crypto Asset Reporting Framework, which also comes into force in 2027. Though some lawmakers fought to increase the tax-exempt ceiling to 50 million won to protect smaller investors, the parties finally agreed on delaying the first 2.5 million won level.

Along with wider initiatives to revitalize South Korea's financial markets, including cancellation of the Financial Investment Income Tax, this postponement corresponds. The government seeks to shield its fast expanding bitcoin environment from enforcement gaps and capital outflow by purchasing time for system improvements and global harmony. Upon passage in 2027, the tax will charge a 20% rate on all yearly cryptocurrency profits over 2.5 million won.