South Korean politicians call for abolition of 22% cryptocurrency tax by 2027

Core Points

A South Korean politician is pushing for the complete elimination of the 22% cryptocurrency tax originally scheduled for 2027. Park So-young believes that the tax proposal will cause injustice to approximately 13 million digital asset holders. According to the plan, starting from 2027, the portion of virtual asset income exceeding 2.5 million won will be jointly taxed at a tax rate of 22%. The lawmaker warned that implementing the tax could accelerate the flow of South Korean capital to overseas platforms. In addition, restrictions on loss carry-forward have also intensified the controversy surrounding cryptocurrency taxation.

Political opposition rises: Cryptocurrency tax plan is questioned

As the January 2027 implementation date approaches, political opposition to the 22% cryptocurrency tax plan in South Korea continues to rise. Park So-young from the National Power Party sharply criticized the plan after comparing and analyzing the tax policy with the traditional stock market tax policy. His intervention exacerbated political friction as authorities continued to advance the controversial measure.

Park So-Yong believes that the tax framework unfairly targets the approximately 13 million individuals in South Korea who participate in digital currency transactions. He emphasized that lawmakers eliminated the income tax on financial investment, but reserved the tax item for cryptocurrency transactions separately. The disparity has inspired opposition calls for the measure to be completely withdrawn or further postponed.

Under current law, South Korea will classify income from virtual asset transactions and lending activities as miscellaneous income. The regulatory framework will officially take effect on January 1, 2027 after three legislative delays. Any proceeds exceeding 2.5 million won will face a federal tax of 20% and a local surcharge of 2% for a total of 22%.

Government officials insist on the 2027 implementation date despite continued challenges from the opposition. Recent fiscal planning documents clearly rule out further delays, demonstrating the government's firm determination to move forward with the plan. Taxpayers will submit their 2027 cryptocurrency income declarations for the first time during the May 2028 reporting period.

Capital outflow risks raise concerns

Park So-Yong believes that implementing this tax structure may accelerate the transfer of capital to international cryptocurrency platforms. He also expressed additional concerns about the diversion of assets to private storage solutions. He dismissed the view that taxing digital assets would naturally channel investment funds to domestic stock markets.

The MP insisted that this policy approach could weaken domestic market participation while encouraging offshore asset transfers. He mentioned that during the first nine months of last year, about 124 trillion won flowed to overseas markets. Independent regulatory statistics also show that throughout 2025, there was a large outflow of cryptocurrency from South Korean exchanges.

Regulators have strengthened oversight mechanisms for international virtual asset flows and disclosure requirements. South Korea has strengthened its monitoring of cross-border cryptocurrency transactions within its foreign exchange regulatory framework. Entities facilitating such qualifying transfers must meet registration agreements and reporting obligations.

Loss carry-forward restrictions cause more controversy

Park So-Yong further questioned the tax plan because existing provisions prohibit loss carry-forward. This framework prevents market participants from using historical losses to offset subsequent profitable transactions. The restriction strengthens the view that regulatory methods discriminate against digital assets compared to traditional investment vehicles.

The National Power Party has submitted a legislative proposal aimed at completely removing cryptocurrency taxes from South Korea's Income Tax Law. Another initiative from the opposition proposes to delay the implementation period until 2030 rather than directly seeking abolition. Both legislative efforts conflict with the government's timetable to start collecting taxes in January.

Currently, South Korea is still promoting the implementation of a comprehensive tax rate of 22% starting from January 1, 2027. Any decision to withdraw or postpone the tax would require an amendment to the current legal framework through Parliament before the scheduled start date. Park So-young's recent advocacy has continued to intensify the pressure surrounding this unresolved political conflict as the critical deadline approaches.