South Korea may need to postpone the implementation of its virtual currency tax law for the fourth time as it continues to face difficulties in creating a clear tax structure for digital assets due to unclear definitions and lack of tax standards for many aspects of virtual currency transactions.
South Korea’s plan to start taxing virtual assets has already been postponed three times, from 2022 to 2023, then to 2025, and now to January 2027, but it has been postponed again. The country’s first cryptocurrency tax law was passed in 2020, but there has been no significant progress since then.
South Korea postpones implementation of virtual currency tax law
The tax framework reportedly has “core flaws,” according to Kim Gapre, a senior researcher at the Capital Markets Research Institute. local media. These flaws include a lack of definitions and tax bases regarding aspects of crypto asset income types such as airdrops, hard forks, mining, staking, and even lending and rental income.
Another problem is that many of these transactions are beyond the reach of governments. Currently, there are no clear rules regarding taxation when users trade on overseas exchanges, use decentralized services, or trade peer-to-peer. Also unclear are the rules for non-residents, how to calculate the cost of acquiring cryptocurrencies, and the exact timing of tax obligations.
These disparities could lead to an unfair system in which only domestic exchange users are taxed, while other users avoid taxation. Officials from the Ministry of Planning and Finance reportedly acknowledged that while large transactions can be tracked, it remains difficult to track smaller transactions by individual investors, especially those using overseas platforms.
These unresolved issues have led some analysts to believe that the implementation of the tax law will be delayed again. Kim warned that if the government fails again during this “grace period,” public confidence in the crypto tax system as a whole could collapse.
global data agreement
South Korea recently signed the OECD’s Crypto Asset Reporting Framework (CARF). This is a multilateral agreement with 48 other countries to automatically exchange virtual asset transaction data from 2027.
Under this system, domestic exchanges such as Upbit and Bithumb report users’ identities and trading data. In return, information about Koreans trading on overseas exchanges will be shared with the Korean National Tax Service (NTS). The government says this will help resolve offshore loopholes that currently cause problems with fair taxation.
Tax watchdogs argue that South Korea first needs to resolve structural issues such as clarifying taxable events and guaranteeing all types of virtual currency income, as trading information internationally may not be enough to ensure a fair and enforceable tax system.
Some are calling for a dedicated task force or “tax TF” to work with exchanges, wallets, and tax authorities to build the missing infrastructure.
A large portion of South Korea’s population is involved in the cryptocurrency market, making the lack of transparency and infrastructure dangerous. In the first half of 2025 alone, the domestic exchange platform had approximately 10.77 million Korean users.
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