South Korea to Tax Crypto Gains in 2027 with 22% Rate

South Korea's government has announced that it will begin taxing crypto gains on January 1, 2027. The tax rate will be a combined 22%, consisting of a 20% national income tax and a 2% local levy.

The exemption threshold is set at 2.5 million won (approximately $1,750), meaning that annual gains below this amount are not subject to taxation. However, losses cannot be carried over into later years, which has raised concerns among lawmakers and investors.

Deputy Prime Minister Koo Yun-cheol explained that the government chose to treat crypto income as 'other income' rather than a capital gain, citing the International Financial Reporting Standards (IFRS) classification of virtual assets as intangible assets. This decision allows for more straightforward taxation without creating ambiguity around staking and airdrop earnings.

The tax regime has sparked debate about fairness, with some arguing that the exemption threshold is too low compared to the abolished stock tax, which would have applied above 50 million won. The Ministry of Economy and Finance maintains that major shareholders, overseas stocks, and unlisted shares already face taxation, making it consistent to tax virtual assets under the 'other income' category.