South Korea’s Democratic Party Weighs Fourth Delay to Crypto Tax, Calls In Heads of Five Major Exchanges

With a little more than two months left before virtual-asset taxation is due to take effect, South Korea’s Democratic Party is gathering industry feedback on another delay. The main issue is concern that difficulties securing overseas trading data could leave users of domestic exchanges bearing a disproportionate tax burden. The government is leaning toward a postponement, but differences remain within the party.

JoongAng Ilbo reported on October 29 that the Democratic Party’s policy committee will hold a meeting at 10 a.m. on October 30 with the heads of South Korea’s five largest virtual-asset exchanges, including Dunamu and Bithumb. Democratic Party lawmakers on the Finance and Economy Committee, which will review a proposed amendment to the Income Tax Act, are also set to attend.

The meeting is intended to check how prepared the industry is for taxation and help coordinate views within the party. The Finance and Economy Committee and the Ministry of Economy and Finance held a party-government policy consultation on October 28 but did not decide whether to delay the tax. A policy committee official told JoongAng Ilbo that opinions within the committee remain divided, unlike the government’s position favoring a postponement.

The discussion is centered on the possibility that tax treatment could differ depending on the trading route. Data collected from domestic exchanges alone is limited in identifying the purchase prices and transaction records of assets that passed through overseas exchanges. Another issue is how fully exchanges have built the computer systems needed to submit tax data.

Under current law, income from the transfer or lending of virtual assets will be taxed from next year at 22%, including local income tax, after an annual deduction of 2.5 million won ($1,810). The measure was originally due to take effect in 2022, but after three postponements the start date was pushed back to 2027. Another delay would be the fourth.

The length of any further postponement has not been decided. The Democratic Party plans to review options including moving the start date to a specific year such as 2028 or aligning it with the implementation of the Framework Act on Digital Assets. It aims to reflect industry views after weighing how long it will take to secure overseas trading data and upgrade exchange systems.

A policy committee official said the party plans to hold a high-level consultation with the government in November and reach a conclusion then.