South Korea’s Crypto Tax Drama: Will They Kill the 22% Fee?

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South Korea’s opposition party has launched a bold campaign to abolish the upcoming 22% crypto tax, citing the US regulators’ guidance on asset classification, concerns about double taxation, and the current tax system’s tendency to confuse even a seasoned accountant with a PhD in confusion.

SK Lawmakers Push To Repeal Crypto Taxation

On Thursday, local news outlet Digital Asset reported that South Korea’s People Power Party (PPP) proposed a bill to amend the long-delayed Income Tax Act, which is scheduled to take effect next year. Because nothing says “excitement” like a tax code so convoluted it could double as a puzzle.

According to the report, PPP’s floor leader, Song Eun-seok, introduced the legislation on March 19, seeking to abolish the taxation of crypto assets. If approved, the amendment would remove all provisions governing the taxation of digital assets in the current Income Tax Act. Because who needs clarity when you can have a 20% tax rate that’s “up to 22% including local taxes”? A mystery, that’s what.

Under the current digital assets law, crypto assets will be subject to a 20% income tax rate, up to 22% including local taxes, starting January 1, 2027, with a deduction limit of 2.5 million won. Because nothing says “fairness” like a deduction limit that’s less than the cost of a decent cup of coffee in Seoul.

Originally, the government proposed implementing a 20% tax on crypto gains by January 2022. However, the rule change has been postponed three times, including a two-year delay to the January 1, 2025, implementation date in December 2024. Because who needs punctuality when you can have a tax policy that’s always one step behind the times?

As the report noted, the People Power Party and the Democratic Party of Korea (DPK) clashed over the latest two-year delay, with the PPP and the government supporting the postponement. In contrast, the DPK advocated raising the tax deduction limit to 50 million won rather than postponing crypto taxation, ultimately agreeing to postpone it until 2027. Because nothing says “compromise” like a 2027 deadline that’s so far away, you’ll need a time machine to reach it.

The proposed amendment mentioned recent joint guidance by the US Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC). This guidance classified most digital assets as commodities rather than securities, which reportedly raised concerns in South Korea that “treating them under the same tax system as securities is inappropriate.” Because nothing says “international cooperation” like a tax system that’s still figuring out if crypto is a commodity or a security.

“Since digital assets are already classified as commodities in Korea and subject to the value-added tax system, imposing an additional income tax on them would create issues of double taxation,” the report added, citing the bill. Because nothing says “logical” like a tax system that’s already taxing your crypto twice-once as a commodity, and once as an income.

The amendment contends that imposing a separate income tax on digital assets raises concerns regarding the fairness and consistency of the tax system, considering that the financial investment income tax has been abolished to promote capital market development and protect investors. Because nothing says “fairness” like a tax system that’s inconsistent enough to make a lawyer cry.

If income tax is imposed in the future, significant practical and administrative difficulties are expected, such as determining the acquisition cost for non-resident foreigners, which would limit the effectiveness of the system.

DPK To Review Tax Amendment Despite Long-Standing Policy

In response to the People Power Party’s push to abolish the 20% crypto taxes, the Democratic Party of Korea has affirmed that it will review the recently introduced amendment. Because nothing says “democracy” like a political party that’s suddenly interested in reviewing a bill they previously ignored.

DPK’s Senior Deputy Floor Leader for Policy, Kim Han-kyu, acknowledged PPP’s concerns about tax equity between stocks and crypto assets and the consistency of the Korean tax system. Because nothing says “equity” like a tax system that’s so inconsistent, it’s a miracle it hasn’t collapsed under its own weight.

“I am aware that there are calls to strike a balance between the stock market and the digital asset market in terms of taxation,” he told reporters after a general meeting of lawmakers on Thursday. Because nothing says “balance” like a tax policy that’s still figuring out if it’s a tax or a game of chance.

Kim also revealed the South Korean ruling party had not considered a proposal or any measures to abolish the upcoming crypto taxation, as it had “not yet reached a level where it is being seriously discussed or where there is a consensus within the party.” Because nothing says “consensus” like a party that’s too busy arguing over who’s to blame for the tax code’s chaos to actually agree on anything.

The PPP’s bill was not previously discussed between the ruling and opposition parties in advance, he stated, but affirmed that DPK lawmakers will discuss the bill in the Finance and Economy Committee now that it has been introduced. Because nothing says “transparency” like a political process that’s only now discovering a bill that’s been sitting on a desk for months.

Nonetheless, he noted that the party’s stance had previously been to proceed with the existing bill, previously advocating a higher deduction limit instead, which could signal the proposed amendment risks limited support from the DPK. Because nothing says “support” like a party that’s more interested in delaying the inevitable than actually solving the problem.

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2026-03-20 13:11