Virtual Asset Tax Deferral Excluded... 22% Separate Tax on Crypto Gains Starting Next Year [2026 Tax Reform]

Implementation Set for January Next Year Pending National Assembly Approval


Separate 22% Tax Rate on Capital Gains from Trading

The taxation of capital gains from virtual assets, which was originally scheduled to be introduced in 2022 but was postponed due to insufficient infrastructure, is now set to be implemented.

On August 3, the Ministry of Economy and Finance finalized the "2026 Tax Reform Plan" excluding the proposal for the further deferment of virtual asset taxation. If this tax reform plan is ratified by the National Assembly after deliberation, the taxation on capital gains from virtual assets will officially begin in January next year. The first filing and payment will take place in May 2028.

Taxation on virtual assets involves imposing taxes on investment income from virtual assets such as Bitcoin and Ethereum. According to the current Income Tax Act, starting from January 1 next year, if the income gained from trading virtual assets exceeds 2.5 million won ($2,500) per year, the portion exceeding this threshold will be taxed at a rate of 20% (22% including local income tax).

For example, if you earn a profit of 5 million won ($5,000) by buying and selling Bitcoin over one year, you will need to pay tax at a rate of 22% on 2.5 million won ($2,500), which is the amount exceeding the basic deduction of 2.5 million won ($2,500). This will result in a tax liability of 550,000 won ($550).

Although the amendment to the Income Tax Act confirming taxation on virtual assets was passed in December 2022, the implementation was postponed three times—to 2023, 2025, and 2027—due to the incomplete establishment of the taxation system and related infrastructure.

The foundation for taxation is now in place. Under the OECD’s Crypto-Asset Reporting Framework (CARF) agreement, starting next year, the National Tax Service will have access to overseas virtual asset trading databases from 48 countries, including Japan, Germany, and France. As a result, a significant part of the previous "taxation gray area" will likely be resolved.

Earlier, Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-cheol stated, "We will implement taxation on schedule from next year but will make necessary adjustments in the course of operating the system."

However, there is a possibility that the implementation could be postponed again through further discussion in the National Assembly, such as by extending the deferment by one more year. The People Power Party has already proposed an amendment to the Income Tax Act seeking the complete abolition of virtual asset taxation, citing fairness compared to the abolition of the financial investment income tax. There is also significant public backlash against enforcing taxation in a market that remains weak due to the recent decline in virtual asset prices.

This content was produced with the assistance of AI translation services.