South Korea's Cryptocurrency Tax System to Be Implemented in 2027 with a 22% Tax Rate for Income Exceeding 2.5 Million Won

South Korea's cryptocurrency tax system will officially take effect on January 1, 2027. According to a statement from the Ministry of Economy and Finance, a tax rate of 22% will be applied to cryptocurrency income, which includes a 20% national income tax and a 2% local income tax, applicable to the portion of annual income exceeding 2.5 million won. This tax will be levied under the category of "other income" rather than capital gains tax. The taxation scope for cryptocurrencies covers income from "transfer" and "lending," with taxes due on amounts exceeding 2.5 million won. The system was initially planned for implementation in 2022 but has faced multiple delays, with the first declaration expected to occur in May 2028 for income earned in 2027. Opposition voices remain, with the People Power Party criticizing the proposal for lacking a "loss offset" mechanism, which could lead investors to turn to overseas exchanges. Deputy Prime Minister Koo Yun-cheol has stated that the plan will be implemented as scheduled, while a bill to abolish the tax was submitted to the subcommittee for review on July 29.

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