South Korea’s 22% crypto tax is months from launch, and lawmakers doubt the system can track gains

South Korea’s People Power Party has called for a fresh review of the 22% crypto tax due to take effect on Jan. 1, 2027, warning that gaps in tax infrastructure, transaction records and asset classification could make it hard to enforce. The push comes as a petition to postpone the levy has passed 50,000 signatures, the threshold that requires a National Assembly committee to consider it.

The party’s latest position does not amount to a final change in the law. Instead, lawmakers said they intend to examine the timing and design of the digital asset tax, including whether the existing system can reliably calculate taxable gains.

The debate comes after South Korea previously postponed implementation by two years. The National Tax Service currently identifies Jan. 1, 2027, as the starting date for taxation of qualifying virtual-asset transfers and lending.

Acquisition records emerge as a digital asset tax challenge

A central issue raised by the party concerns the calculation of acquisition costs and transaction histories. Digital-asset activity can involve domestic and overseas exchanges as well as transfers through personal wallets, making it more difficult to establish when an asset was acquired and at what price.

The People Power Party also raised questions about newer forms of activity, including staking and decentralized finance. The party said clearer standards are needed to determine how income and losses from such transactions should be treated under the digital asset tax framework.

Policy committee chairwoman Lim I-ja also pointed to a broader question of tax treatment across asset classes. Her concerns followed the abolition of South Korea’s financial investment income tax, which changed the tax environment for individual investors in listed domestic shares. The party argued that the changed environment warrants another examination of how digital assets are treated.

The issue also has a practical dimension for taxpayers. Without reliable records and clear calculation standards, investors could face uncertainty over the amount of taxable income they must report.

The current system calculates taxable virtual-asset income by deducting acquisition costs and related expenses from proceeds, while the law provides specific rules for assets whose acquisition cost is difficult to verify.

Industry calls for a measured digital asset tax rollout

The Digital Asset Exchange Joint Consultative Body, known as DAXA, also urged policymakers to consider the wider regulatory framework. Its chairman, Oh Se-jin, said the taxation debate has continued since 2020 and has involved repeated reviews and postponements.

Oh described the Digital Asset Basic Act as the sector’s “second-stage” legislation and argued that the institutional framework for digital assets should develop alongside taxation. The existing user-protection law for virtual assets is already in force, but broader legislation remains under discussion.

DAXA’s participation reflects the industry’s concern that taxation cannot be considered separately from rules governing digital-asset businesses and market participants. The group said it would continue serving as a bridge between policymakers and the private sector as the framework develops.

The debate therefore extends beyond the tax rate itself. Questions over definitions, reporting, transaction records, non-resident taxation, staking and DeFi could all affect how the digital asset tax operates in practice.

For non-residents, South Korea’s tax rules separately address virtual-asset income generated through domestic virtual-asset businesses, including withholding requirements in specified circumstances.

Petition adds pressure to digital asset tax review

The debate has also drawn attention from investors. A national petition seeking a postponement of the planned tax has surpassed 50,000 signatures, the threshold that triggers consideration by the relevant National Assembly committee. Recent reporting said the petition sought additional time to establish the infrastructure needed for implementation.

The first tax filing for gains arising in 2027 is expected during the May 2028 comprehensive income-tax reporting period. Until lawmakers pass any amendment changing the existing timetable or framework, the Jan. 1, 2027, start date remains the statutory schedule published by the National Tax Service.

For now, the People Power Party’s review places the digital asset tax back at the center of South Korea’s cryptocurrency policy debate. The immediate questions are whether the reporting infrastructure can support accurate calculations, how newer forms of digital-asset activity will be classified, and whether the tax framework should advance alongside the proposed Digital Asset Basic Act.

The outcome will depend on legislative action rather than the party’s review alone. Any change to the current digital asset tax timetable or method would require the relevant amendments to be enacted.

The National Tax Service currently states that the planned regime applies to qualifying virtual-asset transfers and lending from Jan. 1, 2027, with a 2.5 million won basic deduction and a 20% national tax rate before local income tax.