A petition in South Korea calling for a further postponement of taxation on crypto assets has reached the required 50,000 signatures to be submitted for parliamentary review. Under the current system, South Korea still plans to levy taxes on earnings from eligible digital assets starting from January 1, 2027.

Petition for review by the committee

According to South Korea's National Assembly electronic petition system, a petition can be submitted to the relevant standing committee for review after collecting 50,000 valid signatures during the collection period. However, this procedure itself will not amend the Income Tax Act, nor does it necessarily imply that the National Assembly will vote on it, nor will it automatically postpone the effective date of the tax measures.

This petition requests that the implementation of the crypto tax, originally scheduled for January 1, 2027, be postponed for another two years. The petitioners argue that many crypto investors are still in a state of significant losses, and if taxation is imposed immediately, it could further burden young investors.

The current plan still targets the year 2027.

South Korea currently plans to levy taxes on the transfer and lending of digital assets. The national tax rate is 20%, plus an additional 2% local income tax, resulting in a total tax burden of 22%. Each resident is entitled to a basic deduction of 2.5 million Korean won per year.

According to current regulations, if the annual income from digital assets exceeds 2.5 million Korean won, the excess amount will be subject to taxation. This taxable income is classified as "other income" and is taxed separately, not included in the comprehensive income. Investors are required to file a tax return for their taxable cryptocurrency income from the previous year in May of the following year.

This means that if the tax regime is implemented as planned in 2027, the first batch of related tax filings will appear in May 2028. The South Korean National Assembly passed a legislative amendment in December 2024 to postpone the implementation of the crypto tax to 2027 again. To further delay it, another legislative amendment by the National Assembly would be required.

Tax authorities continue to advance preparations.

South Korea's crypto tax was originally scheduled to be implemented in 2022, and since then, it has been postponed to 2023, 2025, and 2027 respectively. If this petition is accepted, it will mark the fourth postponement.

Yonhap reported that Lee Jong-il, the nominee for Vice Prime Minister for Economy and Minister of Planning and Finance in South Korea, stated that the National Tax Service plans to announce more specific taxation standards by the end of 2026 in order to reduce the problems encountered by taxpayers during their declarations.

Current guidelines indicate that trading, exchanging, and lending digital assets may all result in taxable income. For assets held prior to the implementation of the tax regime, the cost of acquisition is typically determined by the higher of the investor's provable purchase price or the market price on December 31, 2026.

Private wallet tracking is also in preparation.

The South Korean National Tax Service has admitted that it is not easy to directly identify all unreported private wallet transactions. However, the tax authorities are planning to introduce commercial tracking tools to analyze the flow of funds between blockchain addresses.

Relying solely on on-chain tracking cannot directly confirm the actual controller of a wallet. Exchange information, bank records, transaction history, and taxpayer declaration data will still be important supplementary materials for identifying individual identities.

Additional information:South Korea also plans to utilize the OECD's framework for reporting on crypto assets to obtain cross-border data. According to the current arrangements, participating regions will exchange relevant information in 2028, covering eligible transactions that occurred in 2027. As of September 14, South Korea's National Assembly has not yet announced the hearing or voting schedule for this petition.