South Korea Ramps Up 2027 Crypto Tax Prep Amid Abolition Calls

South Korea’s tax authority has begun preparations to implement its 20-22% tax on crypto income starting next year, fast-tracking the development of a tax base and tracking system to end years of delays for the Income Tax Act.

In an NTS briefing, Park Jeong-yeol, Director of the Individual Taxation Bureau at the National Tax Service, affirmed that the agency plans to secure data from exchanges and establish a taxation system to ensure smooth execution of the comprehensive income tax filing scheduled for May 2028.

Since a law has been enacted to tax virtual asset income generated starting next year, we are preparing to accept filings starting with the 2028 (May) comprehensive income tax filing.

Under the Income Tax Act, crypto assets will be subject to a 20% income tax rate, up to 22% including local taxes, starting January 1, 2027, for profits exceeding 2.5 million won annually.

In addition, the NTS is accelerating the development of its tax infrastructure. Last month, the agency announced it would develop an AI-driven system, the “Comprehensive System for Virtual Asset Transaction Analysis,” to track crypto investment gains.

An official from the NTS said that they “plan to compile data from exchanges by January 2028 (tentative), review various cases to finalize the tax collection system, and complete preparations so that comprehensive income tax returns can be filed in May of the same year.”

Nonetheless, political uncertainties have made it unclear whether the tax will be implemented. Notably, the framework was initially expected to be implemented in 2022 but has been postponed three times.

The lawmaker argued that imposing a separate income tax on crypto assets raises concerns regarding the fairness and consistency of the tax system, noting that the financial investment income tax was abolished to promote capital market development while protecting investors.

However, he noted that the two parties previously clashed over delaying the Income Tax Acts, which may signal the proposed amendment could receive limited support from the DPK.