A South Korean lawmaker has introduced a bill that would push back the country’s planned cryptocurrency taxation to 2029, arguing that current tax infrastructure is not equipped to handle transactions on decentralized platforms. Kim Sang-hoon of the ruling People Power Party (PPP) filed the amendment to the Income Tax Act on Aug. 28, according to a report by Digital Asset.
Proposed Delay and Rationale
Kim’s proposal seeks to move the taxation of virtual assets to January 2029, two years later than the currently scheduled start date of January 2027. The lawmaker said the National Tax Service lacks sufficient tools to track or verify trades executed through decentralized exchanges, peer-to-peer markets, and DeFi protocols. In contrast, transactions on domestic centralized exchanges are already subject to reporting requirements, making them easier to monitor.
Kim also noted that a global framework for sharing virtual-asset transaction data among major economies is still in development. He warned that without such a system, South Korean tax authorities could face significant gaps in collecting information on overseas crypto transactions, potentially leading to tax evasion and unfairness.
Growing Push Within the PPP
This bill is the third from PPP lawmakers seeking to either delay or abolish crypto taxation. Previously, lawmakers Song Eon-seok and Jeong Seong-guk introduced similar proposals. The repeated legislative efforts reflect a broader debate within the party and the National Assembly about how to regulate and tax the rapidly evolving digital asset market.
South Korea has been preparing to tax crypto gains since 2021, but the implementation has been repeatedly postponed due to market volatility and industry concerns. The current law, passed in 2024, set the tax to take effect in 2027, with a deduction threshold of 2.5 million won (approximately $1,850) for annual gains.
Implications for Investors and the Industry
If Kim’s bill passes, crypto investors in South Korea would have more time before facing tax obligations on their trading profits. The delay could also give the tax authority additional time to build the necessary monitoring systems and to participate in international data-sharing agreements. However, the proposal is not without opposition. Some lawmakers and tax experts argue that further delays would only postpone needed clarity and could lead to revenue shortfalls.
The outcome of these bills will be closely watched by the crypto industry, which has been seeking regulatory certainty to foster innovation and adoption. A clear tax framework is seen as essential for institutional participation and long-term market stability.
Conclusion
The proposal by Kim Sang-hoon adds to a growing list of legislative efforts to adjust South Korea’s crypto tax timeline. Whether the National Assembly will approve a delay or move forward with the 2027 implementation remains uncertain. The decision will have significant implications for investors, tax authorities, and the broader digital asset ecosystem in the country.
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