(LEAD) S. Korea to seek 2-year delay in tax on cryptocurrency gains

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By Kang Yoon-seung

SEOUL, Nov. 5 (Yonhap) -- South Korea will seek to delay a planned tax on cryptocurrency gains by two years, from 2027 to 2029, considering the timeline for tax information exchanges with the United States and the need to prepare for changes in the regulatory framework, the finance minister said Thursday.

Finance Minister Lee Hyoung-il made the remark during a press conference in Seoul, noting the government will work with the National Assembly on the proposed delay.

"It is with a heavy heart that I announce another proposed delay in taxation, after its implementation has already been postponed three times," Lee said. "The government will use the two-year period to ensure that taxation of virtual assets can be implemented smoothly in 2029," he added.

The government explained that as the country is set to begin exchanging information on virtual assets with Washington in 2029, introducing the tax before then could put the domestic cryptocurrency market at a disadvantage.

"The proposed delay aims to uphold the basic principle that income should be taxed while improving the effectiveness of taxation on domestic and overseas transactions, ensuring greater fairness among taxpayers, and establishing a reliable and stable framework for taxation," the Ministry of Finance and Economy said.

Seoul first moved to tax gains on virtual assets in 2020 for implementation in January 2022. If finalized, the proposed delay would be the fourth.

Under the scheme, a 22 percent tax, including local income tax, would apply to the portion of annual cryptocurrency gains exceeding 2.5 million won (US$1,869).

The government plans to form a public-private working group to refine the tax system, develop detailed taxation rules for various transactions and make filing easier for taxpayers.

"The working group will hold its first meeting soon and continue discussions through the first half of next year," the finance ministry said, adding it plans to submit legislative amendments to the National Assembly during its regular session in 2027.

The ministry said it will continue to monitor developments in international information-sharing arrangements for taxation on overseas transactions.

Given the volatility of cryptocurrency prices, the government will also seek to allow investors to carry forward losses for up to three years to offset future gains, following similar practices in the U.S. and Britain.

The government will also work with the Financial Services Commission to speed up the enactment of a digital asset law aimed at promoting sound growth in the market and protecting users, it added.

"We will work closely with the National Assembly on the necessary legislation and overhaul our tax rules and enforcement systems to ensure the tax is applied fairly," the finance ministry said.

colin@yna.co.kr
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