Cheong Wa Dae Defers 22% Digital Asset Tax for a Fourth Time

Deferral Direction Set, Bill Review Pending

South Korea's presidential office has decided to postpone the digital asset income tax scheduled to take effect next January, setting the levy up for its fourth deferral since it was legislated in 2020. Party-government consultation and the National Assembly's review of the tax bill still stand between that decision and a finished amendment, but the direction is fixed. The office plans to convene a party-government council and issue a final conclusion as soon as this month's parliamentary audit wraps up.

A Cheong Wa Dae official said the deferral was decided out of respect for the asset ladder of younger Koreans and that party-government talks would move on that basis. The harder constraint is technical. The United States will not join the Crypto-Asset Reporting Framework (CARF), the OECD arrangement under which national tax authorities collect residency and transaction data on digital asset users from service providers and exchange it with counterparts abroad, until 2029. The official noted that the US accounts for nearly half of the global digital asset market, and that Washington withholding tax information is the biggest obstacle. Starting on schedule, the official added, would concentrate taxation on users of domestic exchanges and force the tax authority to chase activity on US platforms one by one. Seoul's worry is that a domestic-only levy would push Korean investors toward offshore venues that report nothing back.

Demographics add to the difficulty. The financial authorities' survey of virtual asset investor accounts for the first half of the year found that investors in their 20s or younger, together with those in their 30s, held 44.1% of all accounts, the segment where President Lee Jae-myung's approval is weakest. Within the ruling camp, the prevailing reaction is that enforcing the tax in January 2027 would be hard to defend before that cohort.

22% Levy Debated Since 2020

The levy dates to a 2020 amendment of the Income Tax Act and has already been postponed three times. Its core design taxes annual income from the transfer and lending of virtual assets at a combined rate of 22%, adding other income tax and local income tax, after a basic deduction of 2.5 million won. The rate would apply to the portion of annual gains that exceeds the deduction, reported as other income. Administrative procedures for a January start have been under way, while politicians argued over whether to keep the timetable.

The ruling camp itself is split between two positions: one that a further delay would damage policy credibility, and one that the legal and institutional groundwork is still too thin. Fourteen ruling-bloc lawmakers, led by Park Min-gyu of the Democratic Party, went further and filed a joint bill that would move the implementation date to 2029, explicitly to match the year the United States enters the OECD's CARF. The main opposition People Power Party also supports a deferral, arguing that the tax infrastructure remains inadequate even after years of preparation. Under pressure to close the argument, Democratic Party leader Kim Min-seok said on the party's YouTube program 'Minti 07' that the matter must be settled this year through concentrated party-government consultation.

The polling numbers sharpen the political calculus. A Gallup Korea survey of 1,001 voters aged 18 or older, conducted Oct 20 to 22, put presidential job approval at 24% among respondents in their 20s and 22% among those in their 30s. Observers in the camp read the review as weighing an asset policy that younger voters follow closely, at a moment the party is trying to rebuild support. A formal conclusion is expected through party-government talks and a high-level council.

The fourth deferral reads to us less like a fiscal retreat than a compliance-timing decision. Without US reporting under CARF until 2029, Korea can police only the flows it can see, and the burden would fall almost entirely on users of domestic venues, several of which rank among the world's most active spot markets in our Best Crypto Exchanges tracking. The cost is credibility: a levy legislated in 2020 will have slipped past four start dates by the time any new one arrives. The practical test comes in the November tax bill review, where an amendment formalizing the delay, possibly with a 2029 date attached, is expected to move.