South Korea's Ruling Party Seeks a Fourth Delay of Its Crypto Tax

South Korea's ruling Democratic Party formally asked the government on Wednesday to postpone a crypto income tax due to start Jan. 1, Yonhap reported. If accepted, it would be the fourth delay since the tax was introduced in 2020.

The tax would take 22%, including local income tax, of a person's yearly crypto gains above 2.5 million won (about $1,880), Yonhap said.

"Time for companies and investors to adapt"

Party leader Kim Min-seok announced the request at a supreme council meeting in Seoul. The party wants to pass the Digital Asset Basic Act first, he said, and "allow time for companies and investors to adapt." Kim also said the length of the delay would be set clearly this time, along with groundwork such as using overseas transaction data, the Asia Business Daily reported.

The request doesn't name a length. A day earlier, Democratic lawmaker Oh Ki-hyung said most of the party's members on the National Assembly's finance committee favored a delay, and that about two years came up most often, according to Yonhap.

Why overseas data drives the timing

Yonhap said one factor is 2029, when overseas tax-data swaps get going in earnest. That refers to the OECD's Crypto-Asset Reporting Framework, or CARF, under which tax agencies automatically share users' exchange records across borders. Until it is running, Korea's tax office can see trades on domestic exchanges but has limited visibility into accounts abroad.

A bill from Democratic lawmaker Park Min-gyu would tie the start date to that system: the tax would begin on the second Jan. 1 after Korea's first CARF data exchange, which points to 2029, The Herald Business reported.

Opposition People Power Party lawmakers, including Song Eon-seog, have filed their own bills to delay or scrap the tax, the Herald said. Reports so far don't include a government response to Wednesday's request.

In our opinion: a fourth delay in six years would start to look like a schedule of its own. The detail to chase is the length, because a date tied to CARF would tell Korean traders when the 22% rate actually arrives. Rival bills from both parties lean toward a delay, so the length is where the real debate sits.