South Korea Cracks Down on Crypto Gains with 2027 Tax Framework

South Korea's long-awaited cryptocurrency tax framework is set to launch on January 1, 2027. The government has confirmed the start date after three delays, with officials stating that they expect the current timetable to hold.

The Income Tax Act will require profits from cryptocurrency and other virtual asset transactions to be taxed starting in 2027. Investors will receive an annual deduction of 2.5 million won, and gains above that threshold will face a 20% national rate plus local taxes that can reach up to 22%. Authorities plan to classify virtual asset profits as other income.

Taxpayers will need to calculate gains by subtracting eligible acquisition costs from disposal proceeds, a process that may require detailed records from domestic and overseas platforms. Domestic exchanges are expected to play a central role in supplying transaction data, while investors who trade across multiple accounts may need to reconcile prices, fees, and transfers.

People Power Party lawmaker Kim Sang-hoon questioned the absence of loss carryforward deductions, warning that the rule could weaken domestic trading demand. The government has left room for technical refinements and may adjust specific rules after implementation if practical issues appear once filings begin.