The South Korean government is facing sharp criticism once again over its planned 22% crypto tax. Park Soo-young, a lawmaker from the People Power Party, urged the repeal of the regulation before its enforcement deadline on January 1, 2027. The rule imposes a 20% income tax plus a 2% local tax, with an annual deduction limit of only 2.5 million won.
The disparity is evident when compared to other investment instruments. While the government has completely scrapped taxes on domestic stock investments, it maintains the same heavy burden on virtual assets. Park described the move as a “tax bomb” that penalizes the country’s 13 million digital asset users.
Capital Flight of Tens of Billions of Dollars
The impact of this policy is already measurable. Data shows that approximately 124 trillion won flowed out to foreign crypto exchanges between January and September last year. This trend continues rapidly; the Financial Services Commission (FSC) reported that crypto outflows reached 90 trillion won, or about $60 billion, in the second half of 2025 - a 14% increase from the previous half-year.
One technical detail most opposed by investors is the offset rule. Unlike conventional investment instruments, losses from falling crypto prices in one period cannot be carried forward to the next year to reduce the tax bill. Addressing this loophole, Park sharply criticized the government’s stance, saying it wants “to dip its spoon into the profits but ignore the losses.”
Three Postponements with No Certainty
The planned crypto tax has a long history of delays. Since it was first proposed in 2020, its implementation has been postponed three times, ultimately being pushed to 2027. If this schedule holds, investors will only report their taxes in May 2028 for income earned in 2027. In preparation, the National Tax Service (NTS) is currently drafting implementation guidelines for South Korea’s five largest exchanges - Upbit, Bithumb, Coinone, Korbit, and Gopax.
However, grassroots opposition has continued to grow even before the rule takes effect. A public petition calling for the abolition of the tax has already gathered 50,000 signatures, a milestone that automatically triggers a review by the National Committee. On the legislative side, the People Power Party submitted an amendment bill last March. The final decision by parliament will be the sole deciding factor for these 13 million investors: stay and bear the heavy cuts, or join the wave of moving their assets to foreign exchanges.
Sourced from crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
