South Korea’s Democratic Party Agrees to Two-Year Delay on Crypto Tax Implementation

South Korea's Democratic Party has reversed its earlier stance and agreed to a two-year delay in the implementation of the country’s crypto capital gains tax, pushing the effective date to 2027.

During a press conference on December 1, Park Chan-dae, the floor leader of the Korea Democratic Party (KDP), announced that the party had consented to a two-year moratorium on the proposed tax, which was part of a broader policy put forward by the government and the ruling People’s Power Party (PPP). Originally slated to take effect in January 2025, the tax will now be delayed until 2027.

Back-and-Forth Over Crypto Tax Delays

Earlier, the South Korean government had suggested a two-year grace period for the crypto tax, while the PPP proposed an even longer, three-year delay. The ruling party argued that imposing the tax too quickly could drive investors out of the market, stating that it was unwise to rush such measures. The PPP had even suggested pushing the tax's implementation to 2028, fulfilling a promise made during their election campaign.

Initially, the KDP was strongly opposed to these delay proposals, claiming that they were politically motivated by the PPP to gain favor in future elections. On November 20, the KDP criticized the government's plan as a "political trick" and vowed to proceed with implementing the crypto tax in 2025. They also proposed increasing the tax exemption threshold from $1,800 to $36,000, suggesting that the revised tax plan would primarily impact larger investors rather than ordinary citizens.

A Long Road to Crypto Taxation

South Korea's plans to tax crypto gains have faced several delays. Initially set to be implemented in 2021, the tax was pushed back to 2023 following significant opposition from crypto stakeholders. The government then postponed the implementation once more to 2025, citing concerns over protecting investor interests.

Once the tax is finally enacted, South Korean crypto investors will be subject to a 20% tax on gains from digital assets.

Conclusion

The decision to delay the crypto capital gains tax by another two years marks a shift in the Democratic Party's position. While the ruling PPP pushed for a longer delay, the KDP's initial resistance ultimately gave way to compromise. The prolonged timeline reflects ongoing debates over how to balance regulation with the interests of South Korea's growing crypto market. Investors now have until 2027 before the tax is officially enforced, though the future of the tax remains uncertain as political discussions continue.