South Korea Set To Introduce 20% Crypto Tax in 2025

Key Takeaways

• From 2025, South Koreans will pay income tax on their crypto profits.
• The government had discussed delaying the tax changes.
• A proposed amendment to raise the threshold at which crypto income is taxed wasn’t included.

South Korea is moving ahead with plans for a 20% tax on crypto profits.

With the government aiming to process the necessary legislation on Nov. 26, the move ends speculation that the tax change could be delayed to 2028 or that it could be modified to include a higher threshold for inclusion.

South Korea’s Crypto Tax Explained

As part of plans to tax crypto profits, any realized or unrealized gains over 2.5 million won ($1,791) will be included in an individual’s taxable income for each year.

In other words, all crypto profits above the threshold will be taxed at the same 20% rate as other income for most earners.

No Changes to Tax Threshold

Ahead of the tax changes, Democratic Party lawmaker Jeong Tae-ho proposed an amendment to create a higher threshold of 50 million won ($35,826). The higher threshold would put crypto gains on an equal tax footing as stocks and shares.

This measure would have exempted many retail crypto investors from paying tax on their yearly gains. Instead, the tax burden would have landed on professional traders and wealthy investors.

Ultimately, however, Jeong’s amendment wasn’t adopted, leaving the original 2.5 million won threshold in place.

Expected Impact on Crypto Trading

The decision to uphold the current tax threshold is expected to have several implications for the cryptocurrency trading environment in South Korea.

For high-volume traders and wealthy investors, the 20% tax on profits exceeding the threshold may influence trading strategies and portfolio management decisions.

Critics of the measure have also argued that South Korea doesn’t have the necessary legal framework in place to fully capture the complexities of the global crypto trade.

As many other countries that tax crypto profits have discovered, discrepancies in how different countries regulate exchanges and monitor transactions create loopholes that can be used for tax avoidance.