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A view of the Bithumb Lounge in Seocho District, Seoul. /Yonhap

The South Korean government is seeking to postpone the implementation of a tax on virtual asset income by two years, from January 2027 to 2029. The move is intended to improve the effectiveness of taxation on overseas transactions and ensure greater fairness between domestic and foreign transactions, as the exchange of virtual asset transaction information with the United States is scheduled to begin in 2029. The government also plans to allow investors to carry forward losses from virtual asset investments for three years and deduct them from future gains.

Deputy Prime Minister and Minister of Finance and Economy Lee Hyoung-il announced the plans at a briefing on virtual asset income taxation at Government Complex Seoul on Thursday, saying the government would pursue the measures in consultation with the National Assembly.

The virtual asset tax was introduced through a revision to the Income Tax Act in 2020. Originally scheduled to take effect in 2022, its implementation was postponed three times, first to 2023, then to 2025 and finally to 2027. If the latest proposal passes the National Assembly, it will mark the fourth postponement. Under the current framework, a 20% national income tax would be imposed on income from the transfer or lending of virtual assets after deducting necessary expenses and an annual basic exemption of 2.5 million won.

The main reason behind the proposed delay is the difficulty of obtaining tax information on overseas transactions. With exchanges of information with the United States under the Crypto-Asset Reporting Framework (CARF) set to begin in 2029, the government believes introducing the tax next year could place users of domestic cryptocurrency exchanges at a relative disadvantage.

The government plans to monitor progress in establishing international information-sharing arrangements, assess its ability to obtain overseas tax data and expand infrastructure for integrating and analyzing domestic and foreign transaction records. It aims to maintain the principle that income should be taxed while reducing disparities based on where transactions take place and establishing a stable framework for enforcement. 

The government also plans to revise the taxation system itself. In consultation with the National Assembly, it will seek to introduce a three-year loss carryforward provision, similar to those recognized in major economies such as the United States and the United Kingdom.

The proposed measure would allow investors to deduct losses incurred in one year from profits earned over the following three years, taking into account the high price volatility of virtual assets. It would address a limitation in the current framework, which allows gains and losses from virtual asset transactions to be offset only within the same tax year, without permitting remaining losses to be carried forward.

The government will also work with the Financial Services Commission and other agencies to accelerate the enactment of the Digital Asset Act. The legislation is intended to establish an institutional foundation for the sound growth of the industry and the protection of users. The government plans to reflect changes in the definition of digital assets and the regulatory framework for service providers resulting from the new law in the taxation system.

A joint public-private working group on digital asset taxation will be established, bringing together experts, industry representatives and relevant government ministries. The group will hold intensive discussions through the first half of next year to develop proposals for improving the system. Amendments requiring legislation will be submitted to the National Assembly during its 2027 regular session, while detailed taxation standards are scheduled to be announced in the first half of 2028.

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Deputy Prime Minister and Minister of Finance and Economy Lee Hyoung-il reads a prepared statement at a briefing on virtual asset taxation at Government Complex Seoul on Nov. 5, 2026. /Ministry of Finance and Economy

                                                                                                               Lee Ji-hoon