South Korea -- Cryptocurrency Tax Framework Regulatory Overview

South Korea has deferred taxation on cryptocurrency (virtual asset) gains until January 1, 2027, treating them currently as tax-free for individuals and businesses, with no capital gains tax, income tax, or VAT applied to trading or holding as of 2026.[1][2][3][5]

Capital Gains Tax Rates

Planned taxation from 2027 imposes a 20% capital gains tax (plus 2% local income tax, totaling 22%) on annual profits exceeding KRW 50 million (≈$35,900–$36,000 USD), calculated as selling price minus acquisition cost (adjusted for fees).[1][2][4][6] Some older proposals mentioned a KRW 2.5 million threshold, but recent sources confirm KRW 50 million.[1][4][6] Gains below this are exempt; for poor records, up to 50% of sale price may count as acquisition cost.[1]

Income Tax on Crypto

Crypto gains are classified as "other income" under planned rules, taxed at the 20% + 2% rate above the threshold starting 2027.[3][4] No income tax applies currently (pre-2027).[2][3] Staking, mining, or other yields would likely follow similar treatment once implemented, though specifics remain unconfirmed.[1]

VAT/GST Treatment

No VAT applies to crypto trading; it's treated as non-taxable currently, unlike physical gold (10% VAT).[2][6] The opposition argues planned income tax would create double taxation atop existing VAT on crypto as "goods," but VAT is not actively imposed on pure trading.[6]

Reporting Requirements

• Individuals: Must track acquisition costs, sales, and fees; NTS plans dedicated crypto monitoring units for data collection and evasion prevention pre-2027.[1][3] Blockchain traceability aids enforcement.[1]
• Businesses: Similar tracking required; virtual asset service providers (VASPs) face heightened reporting to NTS.[3] No 2026 reporting mandates, but preparation advised amid delays.[3]

Crypto-Specific Legislation

• 2026 Tax Reform Bill (enacted Dec 31, 2024): Defers tax to 2027; applies to fiscal years from Jan 1, 2026, but gains tax starts 2027.[1]
• Digital Asset Basic Act: Supports framework for oversight and taxation (20% on gains >$35,900).[1]
• Income Tax Act amendments proposed; opposition (People Power Party) bill seeks to scrap 22% tax entirely.[6] Delays occurred multiple times since 2022 due to industry pushback.[3][5][6]

Note: Rules are evolving; sources conflict slightly on thresholds (KRW 2.5M vs. 50M) and exact 2027 start—verify with official NTS guidance.[1][3][6] No direct NTS URLs in results; key references above are secondary analyses of NTS/National Assembly actions.