South Korea to Introduce 20% Crypto Tax in 2025 with $35K Exemption

South Korea is set to implement a 20% cryptocurrency tax starting in January 2025, as confirmed by the Democratic Party of Korea. This new tax framework will impose a 20% tax on crypto profits, with an additional 2% local tax applied to gains exceeding 50 million Korean won (approximately $35,919).

Initially, the cryptocurrency tax was introduced in October 2021 during former President Moon Jae-in’s administration and was scheduled to take effect in 2022. However, due to significant opposition from investors, the implementation was delayed twice. The new exemption threshold represents a substantial increase from the previous threshold of around $1,795, which had been set by South Korea’s National Assembly.

The revised framework is designed to minimize the impact on the majority of retail investors. Furthermore, taxpayers will have the option to claim up to 50% of the total sale price as the acquisition cost if accurate records are not available, providing added flexibility for investors. These adjustments aim to stabilize the market and alleviate concerns among investors.

In 2023, under President Yoon Suk Yeol’s administration, the planned crypto tax was pushed back to 2025 due to fears that its immediate implementation would overwhelm the market and negatively affect investors.

In June, South Korean officials from the Ministry of Economy and Finance proposed that the nation’s legislature consider halting the income tax on crypto gains altogether. This proposal is part of a broader plan to abolish taxes on financial investments, including stocks and funds.

Key legislative votes on the matter are set for late November, with a Tax Subcommittee review on November 25, followed by a plenary session vote on November 26. The Democratic Party of Korea is working to finalize the framework in time for its scheduled rollout in 2025, aiming to strike a balance between protecting investors and regulating the cryptocurrency market.