South Korea’s Ministry of Economy and Finance is officially proposing a two-year extension to the country’s planned 22% crypto gains tax, pushing the start date from January 2027 to January 2029. This proposal marks the fourth time the tax has been delayed, as lawmakers prioritize the stability of the domestic digital asset market over immediate tax revenue. The proposed tax structure includes a 20% capital gains tax plus a 2% local income tax on annual profits exceeding 2.5 million won (approximately $1,800).
The shift in timeline follows intense pressure from the country's massive retail trading base and industry groups who argue that the current infrastructure for reporting is insufficient. Officials are concerned that implementing the tax too early would drive Korean investors toward international platforms, effectively draining liquidity from local exchanges like Upbit and Bithumb. By delaying until 2029, the government hopes to better integrate tax collection with the evolving Virtual Asset User Protection Act framework.
Politically, the move is seen as a strategic play to maintain support among younger voters, who are heavily invested in the crypto market. While the ruling party supports the delay, it must still pass through the National Assembly, where the opposition has previously voiced mixed opinions on repeated postponements. However, the current momentum suggests a high likelihood of approval to avoid market volatility during an uncertain global economic period.
For global market participants, this delay means the influential 'Kimchi Premium' and high trading volumes within South Korea are likely to persist without the immediate dampening effect of a heavy tax burden. Investors should closely monitor the National Assembly's upcoming sessions for a final vote on the amendment. If passed, the delay will provide a multi-year window of tax-free gains for one of the most active crypto-trading populations in the world.