South Korea Nears January Crypto Tax Launch Without Revenue or Collection-Cost Estimates

South Korea’s government has yet to calculate expected tax revenue or additional administrative costs tied to the planned January start of taxation on virtual-asset income.

Edaily reported on Sept. 14 that data submitted by the Ministry of Economy and Finance and the National Tax Service to the office of People Power Party lawmaker Kim Sang-hoon showed that neither agency provided estimates for the revenue impact or tax collection costs of crypto taxation, which is set to take effect in 2027.

The finance ministry said a reasonable revenue estimate is difficult because even if taxation begins next year, the first tax filing will not take place until May 2028. The National Tax Service gave a similar explanation, saying it lacks filings and tax data related to the levy before enforcement begins.

No concrete estimate has been produced for the administrative costs that would arise after the tax takes effect. The finance ministry said it does not keep separate data on changes in administrative burdens, including tax collection costs, stemming from crypto taxation. The National Tax Service also said it is currently difficult to calculate future costs. It said the budget already spent or earmarked to prepare for crypto taxation totals 3.626 billion won ($2.7 million).

The basic data needed to estimate the revenue effect of crypto taxation also remains insufficient. The National Assembly Budget Office said it is difficult to reasonably estimate changes in tax revenue from abolishing the tax because it lacks information on acquisition costs, transfer amounts and the number of taxable investors. The assessment was made in connection with a proposed amendment to the Income Tax Act centered on scrapping crypto taxation. As a result, the bill was accompanied by a statement explaining why a formal cost estimate was not attached.

The National Assembly Budget Office has also proposed raising the minimum taxable threshold for crypto investors above the current 2.5 million won ($1,900). In a study on issues in crypto taxation and ways to improve the system, it said a low threshold could pull large numbers of small investors into the reporting net and increase administrative costs tied to taxpayer support, tax audits and appeals. The study proposed raising the threshold to as much as 20 million won ($14,800).

Lee Hyoung-il, nominee for deputy prime minister and finance minister, is set to attend a confirmation hearing on Sept. 15 and has said crypto taxation will begin as scheduled in January next year. With just over three months left before the planned rollout, the lack of estimates for tax revenue and collection costs is likely to become a contentious issue in parliamentary debate.