South Korea Pushes 22% Crypto Tax to 2029 in Fourth Delay, Offers Three-Year Loss Carryforward

Bitcoin Magazine

South Korea Pushes 22% Crypto Tax to 2029 in Fourth Delay, Offers Three-Year Loss Carryforward

South Korea’s government plans to push back its tax on cryptocurrency gains by another two years to 2029, Finance and Economy Minister Lee Hyeong-il said Thursday, in what would be the fourth delay since the levy was written into law.

The tax is scheduled to take effect in January. To postpone it, the National Assembly must amend the Income Tax Act before then, and Lee said the government would seek lawmakers’ approval during this year’s regular session.

“It weighs heavily on me to propose another delay after the tax has already been postponed three times,” Lee said at a press briefing in Seoul.

Korea legislated the tax in 2020 for a 2022 start. It was then pushed to 2023, 2025 and 2027 as officials conceded that tax systems and investor protections were not ready.

Waiting on U.S. data

The main reason for the new delay is data on overseas trading. When investors move tokens bought abroad onto a Korean exchange, the exchange may have no record of the purchase price needed to calculate a taxable gain.

That gap closes in 2029, when Korea and the United States begin exchanging information under the OECD-backed Crypto-Asset Reporting Framework, or CARF. Introducing the tax before then could put Korea’s domestic crypto market at a disadvantage, the government said.

“Once we begin receiving cryptocurrency transaction data from the United States in 2029, we will have enough information to tax investors who use US exchanges on the same basis as those who trade in the domestic market,” Lee said.

The government also cited the need to align the tax with the proposed Digital Asset Act, which would set rules for digital asset businesses and strengthen investor protection. Korea’s broader crypto rulebook has been moving on several fronts, including a Bank of Korea push to write stablecoins into foreign exchange law.

Exchanges, investors and lawmakers had pressed for more time, with exchanges saying unclear reporting requirements held up system development and testing.

What the 2029 tax would look like

The rate itself is not changing. Individuals would pay 22%, including local income tax, on annual net income above 2.5 million won, or about $1,869, from selling or lending virtual assets such as bitcoin.

What is new is a proposed three-year loss carryforward. Under current law, only losses from the same year can offset gains, so an investor could owe tax in a profitable year even after losing more the year before.

Under the proposal, losses realized in 2029 could offset gains through 2032. Losses realized before the tax takes effect would not be eligible, the government said, citing the volatility of crypto prices as the reason for the change.

The carryforward would follow similar practices in the U.S. and Britain, the finance ministry said. It also said it will work with the Financial Services Commission to speed up the digital asset law.

The government plans to use the extra two years to collect overseas trading records and analyze them alongside domestic tax data. A working group of industry representatives, experts and government officials will review tax rules for different types of transactions and ways to simplify filing through the first half of 2027.

If the review finds that more legislation is needed, the government plans to submit amendments during the National Assembly’s 2027 regular session. Detailed tax guidelines are due in the first half of 2028.

For Korea’s large base of retail crypto traders, the announcement extends a tax-free window that was supposed to close in 2022. Whether 2029 holds depends on the Assembly passing the amendment in the coming weeks and on the U.S. data exchange starting on schedule.

This post South Korea Pushes 22% Crypto Tax to 2029 in Fourth Delay, Offers Three-Year Loss Carryforward first appeared on Bitcoin Magazine and is written by Micah Zimmerman.