Upbit and Bithumb Begin Preparations! South Korea's Cryptocurrency Taxation Will Finally Begin

▲ Ethereum (ETH), Bitcoin (BTC) ©Dasol Ko

South Korean cryptocurrency investors are expected to be subject to full-fledged taxation starting in 2027. As the government confirmed its virtual asset taxation policy, which had been postponed for several years, major domestic exchanges such as Upbit and Bithumb have already begun establishing reporting systems.

According to cryptocurrency media outlet Bitcoinist on May 9 (local time), South Korea's five major cryptocurrency exchanges – Upbit, Bithumb, Coinone, Korbit, and Gopax – are working with the National Tax Service to develop a reporting system in line with the virtual asset taxation system scheduled to take effect in January 2027. The media reported that the government has made it clear that there is a low possibility of postponing or withdrawing the taxation policy this time.

The Ministry of Economy and Finance officially confirmed that virtual asset taxation will be implemented as planned at an emergency forum held in Seoul. Moon Kyung-ho, head of the Income Tax System Division at the Ministry of Economy and Finance, dismissed demands to further delay the taxation date or abolish the system, stating, "There is no change in the plan to implement it in January 2027." He also explained that the 20% tax rate is more favorable to taxpayers than a comprehensive taxation method.

The new tax proposal applies to cryptocurrency profits exceeding 2.5 million won annually. Profits exceeding the standard amount will be subject to a 20% tax rate, with an additional 2% local income tax, making the actual tax rate a total of 22%. Profits generated through virtual asset transfers and lending are also included in the tax base and are classified as 'other income' under the revised Income Tax Act. The government estimates that approximately 13.26 million investors will be affected by this system.

The issue of tracking transactions on overseas exchanges and decentralized platforms has also emerged as a key point. According to the media, the government plans to manage overseas transaction data by utilizing the overseas financial account reporting system and the Crypto-Asset Reporting Framework (CARF). Furthermore, it drew a line on the 'double taxation' controversy, stating that value-added tax imposed on exchange fees and capital gains tax on cryptocurrency are different items.

However, detailed criteria for new types of cryptocurrency income, such as staking rewards, airdrops, and lending profits, have not yet been finalized. The government, the National Tax Service, and major exchanges plan to prepare additional detailed reporting systems and regulations before the 2027 implementation. Bitcoinist predicted that as South Korea is one of the most active individual investor-centric cryptocurrency markets in the world, the impact of this taxation system on the overall market will be significant.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*