South Korea Seeks Two-Year Delay to Crypto Tax, 3-Year Loss Carryforward

South Korea is seeking to delay taxation on virtual-asset income, currently due to begin in January 2027, by two years to 2029. During the postponement, the government plans to strengthen the tax framework for overseas transactions and introduce a system allowing investment losses to be carried forward for up to three years and deducted from future gains.

Vice Prime Minister and Finance Minister Lee Hyoung-il announced at a Nov. 5 briefing at the Government Complex Seoul that the government will consult with the National Assembly on a two-year delay to virtual-asset income taxation. He said the additional preparation time would reflect potential disadvantages for the domestic market and institutional changes stemming from digital-asset legislation.

Virtual-asset taxation has already been postponed three times since the system was introduced in 2020. If the latest proposal is approved by the National Assembly, it would mark a fourth delay. Amid calls from both the ruling and opposition parties for another postponement, the government has decided to first shore up the tax framework.

The government is also pursuing the introduction of tax-loss carryforwards for virtual assets. Under the proposal, losses incurred in crypto investing could be deducted from gains over the following three years, creating an exception to the current plan to calculate profit and loss on an annual basis. The measure will be pursued in consultation with lawmakers.

Lee said the proposal reflected recommendations from experts that, given the high price volatility of virtual assets, it would be more reasonable for tax purposes to allow an exception that nets gains and losses over a certain period.

Securing tax data on overseas transactions will also be a key task. The government said crypto tax-information exchange with the U.S. is scheduled to begin in 2029, making stronger infrastructure necessary to tax domestic and overseas transactions in a balanced way. It also cited concerns that starting taxation before overseas trading data can be adequately secured could put users of local exchanges at a relative disadvantage.

The government also plans to form a public-private joint working group on digital-asset taxation comprising experts, industry participants and relevant ministries. The group will participate in international discussions on an automatic exchange system for digital-asset information and prepare ways to link and analyze data obtained from overseas with domestic trading information. The government will also pursue digital-asset legislation aimed at market discipline and investor protection. It plans to draw up institutional reforms by the first half of 2027, submit any required legal amendments to the regular National Assembly session in 2027, and announce detailed tax standards in the first half of 2028.

Lee said that even if the implementation timeline is adjusted, the basic tax principle that income should be taxed must be maintained. He added that the government would use the next two years to ensure virtual-asset taxation can be introduced smoothly in 2029.