Seoul calls in its five biggest crypto exchanges as a fourth delay of Korea’s 22% crypto tax gains support

The finance ministry in Seoul will sit down with the country’s five biggest crypto exchanges on Tuesday 20 October, 72 days before a 22% tax on crypto gains is due to start on 1 January 2027. According to Yonhap, as relayed by Cointelegraph, and to the Korean dailies Edaily and Newsway, the closed-door meeting in Seoul brings Upbit, Bithumb, Coinone, DigitalX (formerly Korbit) and Gopax together with the industry body DAXA, a few days after a lawmaker from the ruling Democratic Party filed a bill that would push the South Korea crypto tax back to 2029.

That bill is what makes this round different. Korea has postponed its crypto tax three times since 2021, but the government has said all year that there will be no fourth delay, and until last week the ruling party had not moved to change the date. Now it has. The exchanges say they are not ready, opposition lawmakers have filed four bills of their own, and the finance committee wants a readiness report from the tax service by Thursday’s audit.

Nothing has been decided. A ministry official told Edaily the meeting is meant to collect opinions, not to announce a policy the ministry has already settled on.

Who sits at Tuesday’s table, and what the ministry wants to hear

Kwon Dae-young, first vice minister at the Ministry of Economy and Finance and a former vice chair of the Financial Services Commission (FSC), will chair the meeting on the morning of 20 October, Edaily reported on 17 October. Yoo Young-jun, the FSC’s director general for digital financial policy, will also attend, according to Yonhap and Newsway. On the industry side, the chief executives of the five exchanges that trade crypto against the Korean won are invited, along with executives of the Digital Asset eXchange Alliance (DAXA), which speaks for the country’s registered operators, and outside experts.

The ministry’s stated goals are narrow. Edaily says officials want to check whether the National Tax Service (NTS) and the exchanges can actually run the tax from January: how the tax base is captured, and how people will pay. The meeting follows a promise by Deputy Prime Minister and Finance Minister Lee Hyung-il, made at the 6 October parliamentary audit, to gather the views of a wide range of stakeholders, Newsway reported.

Exchanges arrive with a clear message. An exchange official told Yonhap on Sunday that rules for different transaction types were still not settled and that little time was left to build the systems. “There is a shared view in favor of postponing the start of taxation,” the official said, as quoted by Cointelegraph. DAXA, speaking for 27 domestic operators, already sent the government an opinion paper in September asking for a delay, according to Edaily.

South Korea crypto tax: 22% on gains above 2.5 million won a year

The rules come from a 2020 amendment to the Income Tax Act. From 1 January 2027, gains from transferring or lending virtual assets count as “other income”. Each person’s annual gains above a basic deduction of 2.5 million won (roughly $1,750 at the rate the Korea Herald used in December 2024) are taxed at 22%: 20% national income tax plus 2% local income tax, according to Edaily and Newsway.

A worked example from The Asia Business Daily in May: a 5 million won profit leaves 2.5 million won taxable after the deduction, and 22% of that is 550,000 won. People would file for the first time in May 2028, on their 2027 income, according to Crowdfund Insider.

How many people would pay is less clear than the headline numbers suggest. Edaily writes that the tax would reach 13.26 million investors, a figure based on Upbit’s cumulative membership at the end of 2025, which counts sign-ups rather than taxpayers. The Korea Herald counted 7.88 million crypto investors in December 2024, and 19.61 million registered accounts across domestic exchanges.

What the exchanges and the tax service still have to settle

The disputes are practical, and some of them go to the heart of how the tax works. The law taxes income from transfer or lending. Ko Young-il, who heads the NTS personal tax bureau, told lawmakers that the key question is whether income from hard forks, staking rewards or airdropped tokens falls into either category, according to Edaily. He expects confusion among taxpayers in the early period, so the tax service plans to put guidance first.

Staking is the clearest case. Newsway reports that the industry still does not know whether validator rewards are lending income or payment for the work of validating transactions. The exchanges also point to the lack of systems to track each customer’s holdings and to handle reporting and payment, to the absence of loss carry-forward, and to what they see as unfair treatment compared with shares, whose own planned capital gains tax was scrapped in December 2024.

There is a data problem as well. Korean tax authorities can see what happens on domestic platforms but depend on foreign ones for offshore trades, the Korea Herald noted in 2024. DAXA told the government that operators cannot reliably verify the cost basis of coins that arrive from overseas exchanges or self-custody wallets, Crowdfund Insider reported in September. For a user of a centralised exchange in Seoul, that is the difference between a tax bill on a real gain and a bill on the full value of coins whose purchase price nobody can prove.

The NTS has said it will try. At the 13 October audit, Lim Kwang-hyun, then the NTS commissioner, said the agency had prepared to publish its draft notice with the detailed rules around November, while admitting that preparing every point perfectly would be difficult, according to Newsway and Edaily.

The government’s line so far: no fourth delay

Seoul has been firm until now. In May, Moon Kyung-ho, director of the income tax division at the finance ministry, said income from transferring or lending virtual assets would be taxed from January 2027, and tax officials said they would not postpone the tax again, The Asia Business Daily reported. The ministry also decided to keep any deferral out of its summer tax law amendments, and the package it later presented contained none, according to Crowdfund Insider.

Lee Hyung-il held the same line before he took office. In written answers to the National Assembly’s finance committee as minister-designate, he said it would be appropriate to start collecting the tax next year as planned and that the NTS would publish detailed notices before the end of the year, according to Crowdfund Insider.

Investors pushed back. A petition posted on the National Assembly’s website in late August, asking to move the start to 2029, passed the 50,000 signatures that guarantee a committee review, Crowdfund Insider reported. Review is not a change in the law.

Three delays since 2021, each decided weeks before the deadline

The tax was first due on 1 January 2022. The terms were the same 22% on annual gains above 2.5 million won. On 29 November 2021, the Democratic Party, then in government, and the People Power Party agreed in the Assembly’s tax subcommittee to push it back one year, to 1 January 2023, Forkast reported at the time. The full Assembly approved the change before the end of 2021.

In July 2022 the new government of Yoon Suk Yeol proposed two more years. The National Assembly passed the 2022 tax reform bills on 23 December 2022, deferring the taxation of virtual assets from 1 January 2023 to 1 January 2025, EY’s summary of the bills shows. The same package delayed the financial investment income tax on shares and funds.

The third delay came on 10 December 2024, three weeks before the 2025 start. The Assembly passed a revised Income Tax Act that moved crypto taxation to 2027 and abolished the financial investment income tax on stocks altogether, the Korea Herald reported. Kim Kab-lae, a senior researcher at the Capital Market Research Institute, told the paper at the time that “this needs to be the last postponement”.

The pattern matters for Tuesday. Each delay was settled in the last weeks before a start date, and The Asia Business Daily put all three down to incomplete tax infrastructure and systems. The 2027 date was chosen in part to match the first exchanges of crypto account data under the OECD’s Crypto-Asset Reporting Framework (CARF), which the Korea Herald said 48 jurisdictions would start that year.

Five bills to change the date, and one from the ruling party

Park Min-gyu of the Democratic Party introduced his amendment on 16 October. It would start the tax on 1 January of the second year after the year Korea first swaps crypto transaction data with other countries under CARF. With the first exchange expected in 2027, the tax would begin in 2029, Digital Today reported. Twelve Democratic lawmakers co-signed it, plus Park Eun-jung of the Rebuilding Korea Party, according to Edaily.

It is the first time the ruling party has moved to delay the tax. Park’s case rests on timing. Taxing before transaction data and infrastructure are in place would weaken the tax and make it less predictable for taxpayers, the bill argues. It also says that until CARF works, tax data is easy to obtain from Korean exchanges but hard to get from foreign ones, so the burden would fall mostly on users of domestic platforms. The bill also cites the United States, which joins CARF only in 2029. Park has also said the tax should come after a basic digital asset law, not before.

The opposition People Power Party has gone further. Song Eon-seok filed a bill to delete the tax provisions entirely. Kim Sang-hoon and Jung Sung-kook filed separate delay bills, of two to three years according to Edaily, and Kim Jae-seop proposed three years, to 1 January 2030, Digital Today reported.

Inside the Democratic Party, the debate goes beyond the date. Oh Ki-hyung, the party’s secretary on the finance committee, has proposed raising the 2.5 million won deduction, allowing losses to be carried forward and setting lower rates for trades on domestic exchanges, Edaily reported. Lee Kwang-jae, who chairs the budget committee, said at the 13 October audit that the government owed young people an apology before taxing them while stablecoin and digital asset laws are still missing. Min Byung-duck, one of the bill’s co-signers, also backed a delay on Facebook, citing poor preparation and the risk of money leaving the country, according to Edaily.

Not everyone in the party agrees. Finance committee chair Cho Seung-rae said the government should prepare as if the tax will start on time unless the Assembly decides otherwise, and asked the NTS to bring proof of readiness, including the draft notice, to the comprehensive audit on 22 October, according to Edaily and Newsway. The party leadership has not said whether it backs Park’s bill, and no vote is scheduled.

How Korea compares with France and Italy

Korea’s planned rate is lower than what European holders already pay, but its deduction is far more generous. In France, a private individual’s crypto gains are taxed at a flat 31.4% (12.8% income tax plus 18.6% social charges), with an exemption only when total sales for the year do not exceed 305 euros, according to the French tax administration. French MPs have also voted, at first reading only, to tax swaps into stablecoins from 2027, as we covered on 17 October.

In Italy, the substitute tax on crypto gains rose from 26% to 33% for gains made from 1 January 2026, with no exemption threshold, according to the Agenzia delle Entrate. Both countries, like the rest of the EU, will also feed the new crypto data exchange: the first DAC8 exchange of crypto tax data between EU states is set for 30 September 2027.

The bigger difference lies in losses. Under the Korean law, all crypto income is “other income” and losses cannot be carried forward, the Korea Herald noted, while the United States and the United Kingdom tax crypto gains as capital gains, and Germany exempts long-term holdings and allows losses to be carried forward indefinitely. Japan, like Korea, gives no loss offset.

The dates that will decide whether 1 January holds

• Tuesday 20 October, morning: the ministry meets the five exchanges, DAXA and experts in Seoul. No statement has been announced for after the meeting.
• Thursday 22 October: comprehensive audit of the finance ministry, the FSC, the NTS and the Financial Supervisory Service, where lawmakers will return to the tax (Edaily).
• End of October: the government may finalise its draft of the Digital Asset Basic Act, whose disputed points include caps of 15% to 20% on large shareholders of exchanges and won stablecoins issued first by bank-led consortia (Newsway).
• November: the NTS draft notice on the detailed rules, and the Assembly’s work on tax bills, where the delay amendments would have to pass.
• 1 January 2027: the tax starts under current law, unless the Assembly changes it before then. The last delay passed on 10 December 2024.

The outcome turns on the Democratic Party. With the opposition already in favour of delay or repeal, a decision by the ruling party’s leadership to back Park’s bill would put both main parties behind a postponement. If it does not, the government’s message since May stands, and exchanges will have ten weeks to build what they say they lack.

Why CARF sits at the centre of the debate

CARF is the OECD’s framework for tax authorities to blockchain, where users swap tokens directly from their own wallets without handing custody of their funds to a company.">swap information on their residents’ crypto accounts held abroad, much as banks already report foreign accounts. Each country collects data from the crypto platforms operating on its soil and sends the records on foreign residents to their home country. In the EU, the same idea comes through the DAC8 directive.

For a Korean investor this changes what the NTS can see. Today it gets data from Upbit or Bithumb, but very little on accounts at foreign platforms. Park’s bill ties the start of the tax to the moment that blind spot closes. The government’s position so far is that the tax should start in 2027 anyway, two years earlier, with the domestic exchanges supplying the data.