South Korean lawmaker Han Dong-hoon called for a further postponement of the cryptocurrency tax in the country, which was originally scheduled to take effect on January 1, 2027, on the grounds that authorities still lack sufficient data on overseas transactions, making it difficult to enforce the tax consistently.

According to News1, this independent member of parliament and former leader of the National Power Party raised this issue on September 15th in Facebook. He stated that as South Korea approaches the implementation of this long-delayed tax measure, there is still skepticism about whether taxation should begin when encrypted assets can be legally transferred from domestic exchanges to overseas platforms and private wallets.

Han Dong-hoon stated that this tax measure was postponed during his tenure as the leader of the National Power Party in 2024, but he believes that the issues related to its implementation have not been resolved over the past two years.

He said, "Is it really appropriate to rush into implementing such a timid form of taxation now?"

According to current Korean regulations, qualified income obtained from the transfer or lending of virtual assets will be subject to taxation starting from January 1, 2027. For the portion of annual earnings that exceeds the basic deduction of 2.5 million Korean won, a national tax rate of 20% will apply, plus an additional 2% local income tax, resulting in a total tax rate of 22%.

Han Dongxun claims that overseas transactions may make the collection of crypto taxes more complicated

Han Dong-hoon's criticism mainly focuses on the government's ability to identify taxable activities of encrypted assets after they leave Korean trading platforms.

He said that investors can legally transfer cryptocurrencies held on domestic exchanges to their overseas platform accounts, or to private wallets. Once the assets leave these platforms, he believes that it is almost impossible to track each subsequent transfer.

Han Dong-hoon predicts that investors whose expected annual profit exceeds the deduction amount of 2.5 million Korean won may transfer their trading activities overseas after the taxation begins.

He said, "Virtual assets are assets that flow across borders without restriction."

He also believes that the difference in the difficulty of identification between domestic and overseas activities may make it easier for investors who continue to use regulated exchanges to be taxed by tax authorities.

The South Korean government has consistently maintained that overseas activities will also be included in the tax system. crypto.news Previously, in August, it was reported that the Ministry of Strategy and Finance and the National Tax Service of South Korea had confirmed that this tax would cover income generated through overseas exchanges and private wallets.

The government cited the requirements for reporting overseas financial accounts, as well as the framework for reporting on crypto assets established by the Organization for Economic Co-operation and Development (OECD), stating that these tools can provide information on related activities abroad.

Han Dongxun questions whether CARF will be able to provide sufficient coverage at the start of taxation. He claims that this framework may only cover less than 20% of cryptocurrency transactions, and states that participating countries will begin exchanging information at different times.

The original materials provided in this report do not offer supporting data for Han Dongxun's claim of 20%, so this is merely an estimate given by him personally and not an independently verified measurement result.

South Korea plans to use CARF and wallet tracking tools

In response to the implementation challenges raised by Han Dong-hoon, the South Korean authorities are already building multiple systems.

The government expects that with the initiation of international information exchange, CARF will provide information on overseas virtual asset transactions from participating jurisdictions. In August, the Ministry of Finance stated that South Korea anticipates receiving transaction data from 48 participating jurisdictions, including Japan, Germany, and France.

The information obtained through CARF will become part of the government's identification of taxable transactions conducted through overseas platforms.

Private wallets present another execution challenge, as blockchain addresses do not automatically identify who their controllers are.

The National Tax Service has acknowledged that there are practical limitations in identifying each unreported transaction from private wallets. However, holding assets through self-management does not mean that such income is exempt from the proposed taxes.

To fill some of these gaps, South Korea plans to introduce commercial wallet tracking software to track transfers between blockchain addresses. The National Tax Service has already completed a tax source management system and is developing a comprehensive analysis system for taxing virtual assets.

Major Korean cryptocurrency exchanges have also participated in the preparatory work. The National Tax Service has collaborated with the operators Upbit, Dunamu, Bithumb, Coinone, Korbit, and Gopax to develop guidelines covering transaction records and other information required for calculating taxable income.

South Korea has previously imposed separate reporting requirements for some overseas crypto holdings. Starting from the 2023 reporting period, digital assets have been included in the country's overseas financial account reporting system; when the combined balance of overseas assets exceeds the applicable threshold, eligible residents are required to disclose them.

The National Tax Service has recently ruled that even if overseas exchanges have entered bankruptcy proceedings and customers are unable to trade or withdraw assets freely, eligible overseas cryptocurrency accounts may still be subject to reporting requirements.

South Korea maintains the crypto tax schedule for January 2027

Despite multiple attempts to postpone or cancel this tax, the government has so far maintained the implementation schedule for 2027.

When the Korean Ministry of Strategy and Finance finalized the tax reform plan for 2026 in August, it still set the launch date for January 1, 2027.

This tax measure can be traced back to the amendments to the Income Tax Act approved in 2020. It was initially planned to be implemented in 2022, but due to discussions among legislators regarding the reporting of infrastructure and administrative preparations, the implementation date was postponed to 2023, then to 2025, and finally set for 2027.

According to the current framework, taxable income is typically calculated as the annual earnings minus the purchase cost and eligible transaction fees. After the profits and losses are consolidated, a basic deduction of 2.5 million Korean won per year is applied, while eligible income is classified separately as other income.

Investors who earned taxable crypto income in 2027 are expected to submit their first tax returns in May 2028.

Financial officials stated that since the previous delays, significant progress has been made in the infrastructure required for implementation.

At the congressional personnel hearing on September 15, Lee Jong-il, the nominee for Minister of Finance, stated that the government intends to start levying taxes next year, as legislators had postponed the implementation date to 2027 during the discussions in 2024.

Li Jiong-yi stated that government statistics show that 85% of crypto investors hold assets of less than 5 million Korean won. He believes that due to the basic deduction of 2.5 million Korean won and the rules related to purchase costs, the tax burden on most investors will be limited.

Han Dong-hoon, on the other hand, holds a different view on how investment income should be treated. He believes that if the government considers investment returns to be non-labor income, then the income from domestic stocks, overseas stocks, and cryptocurrencies should not receive significantly different tax treatments.

Calls for a further postponement of the encryption tax have reached Congress

Political opposition surrounding the 2027 timeline continues in tandem with the government's preparatory work.

A congressional petition that called for a two-year extension has surpassed the 50,000-signature threshold in September, meeting the requirements for legislative consideration. Once this threshold is reached, the petition will be submitted to the relevant congressional committee, but it will not automatically result in a delay of taxes or changes to current laws.

This petition requests that legislators push back the implementation date by another two years, which would mean that the crypto tax will be postponed for the fourth time.

Another petition calling for the abolition of this tax also exceeded the 50,000-signature threshold in May.

Legislative proposals are also moving in a similar direction. Congressman Chung Seong-guk from the National Power Party has suggested changing the implementation date from 2027 to January 1, 2030, while another proposal from the opposition party aims to completely remove taxation on cryptocurrency income from the Income Tax Act.

Han Dong-hoon mentioned these petition activities in the Facebook post, stating that this year more than 50,000 people have supported the efforts to postpone it.

He said that he intends to intervene again and prevent this measure, just as he did in 2024.

He said, "I will step forward again to stop it, just as I did in 2024."