South Korea is again wrestling with uncertainty around its long-planned virtual asset tax regime. With the clock ticking toward a January 2027 launch, officials acknowledge that the country is still far from ready.
Critical systems, reporting pipelines and regulatory definitions remain incomplete, raising the possibility that another postponement could enter the discussion.
Five years of planning, still no framework
The tax law passed in 2020 and was originally scheduled to take effect in 2022. It has been pushed back three times, most recently to 2027, yet many of the underlying issues remain untouched. The absence of clear rules, workable reporting structures and coordinated decision-making continues to stall progress.
Specialists following the debate note how quickly other regional markets have begun tightening their own rules. Japan recently categorized a broad set of exchange-listed cryptocurrencies as financial products, which places gains under a stable, stock-style tax regime of about 20 percent. Korea’s system is meant to impose a 22 percent tax on annual virtual asset gains above 2.5 million won, though implementing it depends on infrastructure that still does not exist.
Kim Kab-lae of the Korea Capital Market Institute described the repeated delays as highly unusual. Eleven months after the most recent extension, no joint task force has been formed and virtual asset taxation remains absent from the national tax administration agenda. Even the 2025 tax bill, published in September, repeats most of the language from the previous draft rather than refining definitions or addressing gaps.
Basic questions persist. Tax authorities have not clarified how to treat airdrops, staking rewards, mining proceeds, lending income or hard fork distributions. Systems for collecting and verifying transaction data are unfinished, and mechanisms for monitoring activity on offshore platforms are still in development.
Compliance pressure grows as retail participation surges
Retail activity is at record levels, which increases the urgency around policy clarity. The Financial Services Commission reported 10.77 million verified users across domestic exchanges during the first half of 2025. Without clear guidance, launching a tax regime of this scale could expose the government to legal disputes and administrative challenges.
Political disagreements have also slowed progress. The ruling People’s Power Party supported successive delays to avoid pushing users toward foreign platforms, while the opposition initially resisted further extensions before agreeing to the latest schedule. Several lawmakers want the country to synchronize its approach with the OECD’s Crypto-Asset Reporting Framework, which requires automatic cross-border data sharing beginning in 2027.
Even without a finalized tax structure, enforcement efforts have accelerated. The National Tax Service now uses blockchain analytics to track transaction histories and has warned that cold wallets can be seized from taxpayers who fail to settle outstanding debts. Authorities have already confiscated more than 146 billion won in cryptocurrency from more than 14,000 delinquent taxpayers.
Local governments have become more active as well. Cheongju reported seizing crypto from 203 residents since 2021 and liquidating the assets through its own exchange account. Districts such as Gangnam have expanded their seizure programs to close compliance gaps, though challenges persist with users on foreign or decentralized platforms.
Countdown to 2027
Researchers caution that unresolved issues could complicate the 2027 launch. Park Joo-cheol of the Korea Institute of Public Finance warned that lingering ambiguities increase the risk of legal challenges once taxation begins. He urged policymakers to finalize definitions, prepare reporting standards and ensure the country can meet upcoming cross-border data-sharing obligations.
Whether the tax will debut on schedule now depends on how quickly lawmakers and regulators establish a functional framework after years of delay.
Anastasiia G
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