The decision marks a shift from the party’s earlier stance advocating for the tax to take effect in 2025. In a press conference on 1 December 2024, KDP officials confirmed the agreement with the government and the ruling People’s Power Party (PPP) to introduce a two-year moratorium. Initially, the tax law was set to come into effect in January 2025, but this new development will extend the timeline further.
The ruling PPP had originally proposed a three-year grace period, seeking to delay implementation until 2028, while the government suggested a two-year deferral. The KDP’s agreement aligns with the government’s proposal.
The debate over taxing cryptocurrency gains in South Korea has been contentious. The PPP argued that a premature tax could drive investors away from the domestic market, advocating for a longer delay to support growth in the sector. The proposal to delay until 2028 was also part of the party’s election promises.
Until recently, the Democratic Party opposed such deferrals. In November, the KDP criticised the PPP’s tax delay plan, labelling it a political maneuver aimed at gaining leverage in future elections. At the time, the KDP reaffirmed its commitment to implementing the tax in 2025, suggesting instead an increase in the taxable threshold from USD 1,800 to USD 36,000 to target only significant investors.
A prolonged history of delays
South Korea initially planned to impose a 20% tax on cryptocurrency trading profits starting in 2021. However, backlash from industry stakeholders and concerns about its impact on investors led to repeated delays. The implementation was first postponed to 2023, then to 2025, and now to 2027.
Once enacted, South Korean crypto investors will be taxed on gains exceeding the final threshold set by the government. For now, the delay allows the country more time to address concerns and prepare for the tax’s eventual rollout.
