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South Korea lawmaker urges scrapping 22% crypto tax before 2027

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South Korea lawmaker urges scrapping 22% crypto tax before 2027

2026-08-14 09:02 UTCBy AlphaScala Research DeskSource reporting: Crypto newsEditorial standards

South Korea lawmaker urges scrapping 22% crypto tax before 2027

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Park Soo-young says the 22% crypto tax would push capital abroad, citing 124 trillion won in overseas exchange flows; the levy starts Jan. 1, 2027.

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South Korean lawmaker Park Soo-young called for the government to withdraw the planned 22% tax on virtual asset gains before it takes effect on Jan. 1, 2027, arguing the levy unfairly targets roughly 13 million crypto users while investment taxes on domestic stocks have been scrapped.

Park, a member of the People Power Party, criticized the plan on his YouTube channel "Park Soo-young's Economy TV" on Aug. 13, according to Digital Asset. "I hope this punitive tax plan that holds 13 million digital asset users hostage will be withdrawn immediately," he said.

The lawmaker compared the treatment of crypto investors with South Korea's decision to abolish the financial investment income tax, which would have applied to investment income from financial products including stocks. Removing that tax while retaining a separate levy on virtual assets tells investors they could face a "tax bomb" if they avoid the domestic stock market, Park argued.

Under the Income Tax Act, profits from the transfer or lending of virtual assets will be classified as other income from Jan. 1, 2027. Investors get an annual deduction of 2.5 million won; gains above that amount are taxed at 20%. Add the 2% local income tax and the effective rate reaches 22%.

The 2.5 million won deduction matches the basic deduction applied to capital gains from overseas stocks. The financial investment income tax that would have covered certain domestic financial products is no longer planned.

The government says implementation will proceed. In May, Moon Kyung-ho, director of the income tax division at the Ministry of Economy and Finance, confirmed authorities were preparing to introduce the tax on schedule, as crypto.news previously reported. The National Tax Service has been preparing guidance with South Korea's five major exchanges: Upbit operator Dunamu, Bithumb, Coinone, Korbit and Gopax. The guidance is expected in 2026; the first full filing period would open in May 2028 for income earned during 2027.

Political opposition persists. The People Power Party introduced legislation in March to amend the Income Tax Act and abolish the crypto tax before it takes effect. The tax has already been delayed three times. Originally introduced in 2020, it was scheduled to start earlier; the latest postponement moved the start date from 2025 to 2027.

Park dismissed the idea that the tax would push investors into Korean equities. "People will not invest in domestic stocks just because of this," he said, adding the policy could instead accelerate the movement of Korean wealth overseas. He cited data showing that roughly 124 trillion won flowed into overseas digital asset exchanges between January and September of last year.

Capital movement from Korean platforms to foreign exchanges and private wallets has drawn regulatory attention. Financial Services Commission data released in March showed South Korean exchanges recorded 90 trillion won, or roughly $60 billion, of crypto outflows in the second half of 2025, up 14% from 78.9 trillion won in the first half. The regulator attributed part of that activity to cross-border arbitrage; overseas outflows remain under scrutiny.

South Korea has also moved to put more cross-border digital asset activity inside its foreign-exchange framework. Amendments to the Foreign Exchange Transactions Act created a virtual asset transfer service category and require companies handling qualifying overseas crypto transfers to register with the finance minister. The rules cover businesses moving virtual assets between South Korea and foreign countries through sales or exchanges.

Park separately criticized the treatment of losses. "The losses suffered from a crypto crash cannot even be carried forward, yet they are already putting a spoon into the profits," he said.

A public petition seeking a full repeal crossed the 50,000-signature threshold in May, sending the proposal to a National Assembly committee for review. The petition argued that a 22% tax on crypto profits while stock and bond gains remain exempt creates unequal treatment between asset classes.

The Jan. 1 deadline now depends on whether lawmakers change the Income Tax Act before implementation. The government said it will proceed under existing law, and no clear opposition has emerged from the ruling party. The People Power Party continues to seek abolition or another postponement; Park's latest comments called for withdrawal before the scheduled 2027 start.