South Korea Backs Crypto Tax Delay to 2029

South Korea’s government has backed delaying its planned crypto-income tax from 2027 to 2029, less than two months before it was due to begin.

The finance ministry said Nov. 5 it would pursue the two-year postponement with parliament. Lawmakers still need to approve the change.

Overseas Trading Records Complicate Tax Collection

Finance Minister Lee Hyoung-il said authorities need more time to prepare for overseas transaction reporting and changes under forthcoming digital-asset legislation.

South Korea expects to begin exchanging crypto-tax information with the United States in 2029. The ministry said introducing the tax before those records become available could put the domestic crypto market at a disadvantage.

Officials plan to link and analyze overseas trading records alongside domestic tax data. They also intend to clarify how different transactions should be taxed and make filing easier for investors.

Government Proposes Three-Year Window to Carry Losses Forward

Alongside the delay, the government wants to let investors carry losses forward for up to three years. That could allow a bad trading year to reduce the tax due on profits earned later.

Officials gave the example of a loss incurred in 2029 being deductible against gains through 2032. The proposal would establish an ongoing carryforward rule, rather than a temporary benefit available only during the tax’s first three years.

However, officials said losses realized by selling before the tax takes effect would not qualify for carryforward.

A public-private working group will bring together experts, industry representatives and government departments to develop the wider reforms.

The ministry plans to prepare improvement proposals through the first half of 2027. Detailed guidance is planned for the first half of 2028, ahead of the proposed start.

Existing Rules Set a 22% Tax Above 2.5 Million Won

For South Korean tax residents, the planned system covers qualifying income from selling, swapping, or lending crypto assets. Acquisition costs and related expenses are deducted, with annual income above a 2.5 million won allowance facing a combined 22% national and local tax rate.

The system combines gains and losses within each year, with returns due the following May. Moving the start to 2029 would therefore push back the first year of taxable activity by two years.

The tax was originally scheduled for 2022 and has already been postponed three times. The government now supports a fourth delay, but Jan. 1, 2027 remains the commencement date until the law changes.