South Korea has officially confirmed that its planned 22% digital asset tax will apply to income from private wallets and overseas exchanges when the regime takes effect on January 1, 2027. According to government responses submitted to People Power Party lawmaker Kim Sang-hoon, as reported by Digital Asset, the Ministry of Economy and Finance and the National Tax Service stated that the location or custody method of digital assets would not determine whether income from their transfer or lending is taxable. Under the current framework, income from digital assets will be classified as other income with an annual basic deduction of ₹2.5 million, with income exceeding that threshold facing a 20% national tax, rising to a maximum combined rate of 22% after local income tax. The policy aims to close loopholes and align with global trends in digital asset regulation.
The National Tax Service acknowledged that enforcing tax rules for private wallets could prove difficult due to users' ability to create large numbers of addresses without relying on centralized intermediaries. As reported by Digital Asset, the NTS said practical limits remain in identifying every unreported transaction conducted through private wallets. To address enforcement gaps, the agency plans to introduce transaction tracking and analysis programs as part of efforts to reduce tax enforcement gaps. This follows previous enforcement challenges, as in July, tax officials proposed changes to the Criminal Procedure Act to establish procedures for seizing digital assets controlled through private keys, including warrant requirements and court-supervised wallets for storing seized assets.
South Korean lawmakers have introduced legislation that would give the Financial Intelligence Unit (FIU) direct authority to investigate suspected unregistered crypto businesses instead of relying mainly on police referrals. According to Yonhap, People Power Party lawmaker Eom Tae-young and nine other lawmakers filed the amendment on Thursday, proposing new powers under the Act on Reporting and Using Specified Financial Transaction Information. Under the bill, any person could report a suspected violation of the law directly to the FIU, which would be allowed to investigate and analyze the suspected conduct before deciding whether further action is required. The proposal would also allow the FIU to file complaints with relevant authorities, request criminal investigations, and hand information gathered during its review to investigators. However, the bill has only been introduced and must pass the National Assembly before the proposed changes can take effect.
For crypto held or traded through foreign platforms, the National Tax Service plans to obtain information using South Korea's overseas financial account reporting system and the Crypto-Asset Reporting Framework (CARF). According to Digital Asset, CARF was developed by the Organisation for Economic Co-operation and Development to support automatic exchanges of crypto transaction information between participating tax jurisdictions. South Korea has also been increasing oversight through other rules, including overseas transfer rules approved in May that require businesses handling cross-border digital asset transfers to register with the finance minister. Government data shows why overseas platforms have become important, with Financial Services Commission figures covering the second half of 2025 showing ₹60 billion in crypto outflows as assets moved to foreign platforms and self-custody.
The Finance Ministry reiterated that digital asset taxation should begin in 2027 under the basic tax principle that income should be taxed where it arises. According to Digital Asset, the first full filing period for affected investors is expected in May 2028 for income earned during the previous year. However, political opposition continues ahead of implementation, with the People Power Party introducing legislation in March seeking to abolish the planned tax, arguing that applying the levy to digital assets while other forms of investment income receive different treatment creates an unfair burden for crypto investors. A separate public petition calling for repeal later exceeded 50,000 signatures, triggering a National Assembly committee review in May.
