South Korea party files crypto tax repeal

TLDR

South Koreas conservative People Power Party has formally filed a bill to abolish the countrys planned crypto gains tax before it ever takes effect.

1. The bill would remove digital asset income from the Income Tax Act, scrapping a planned 22% tax on gains above roughly 2.5 million won.
2. Lawmakers cite unfair treatment versus stocks and heavy capital flight, with estimates of about $110 billion moving to offshore platforms to escape the tax.
3. The tax is still legally scheduled for 2027, so the key question is whether the Democratic Party majority votes to pass the repeal in coming debates.

Deep Dive

1. What The Bill Actually Does

The People Power Party (PPP) has introduced legislation to strike crypto taxation entirely from South Koreas Income Tax Act, instead of merely delaying it again.

Under current law, from 1 January 2027 crypto gains over 2.5 million won would face a 20% national income tax plus 2% local tax, for a combined 22 percent rate on profits, according to multiple reports, including from Cointelegraph and local media summarized in English.

Coverage in outlets such as Yahoo Finance notes that the PPP bill aims to remove digital asset income provisions altogether, meaning no dedicated crypto gains tax if it passes.

2. Why Lawmakers Are Moving Now

Several reports highlight that the tax design looks harsh compared with other assets. Stocks have a much higher tax?free threshold around 50 million won, while crypto would be hit at roughly 2.5 million won, which critics call discriminatory toward the countrys roughly 6 million retail crypto traders.

CryptoNews and Yahoo Finance both report estimates of about $110 billion in digital assets being shifted from Korean exchanges to offshore platforms, apparently in anticipation of the 22% levy on gains. That visible capital flight appears to have pushed the political system toward considering outright repeal.

At the same time, tax authorities are already spending roughly 3 billion won on an AI?driven crypto tracking system intended to enforce the tax, as noted by Korean press and summarized by several English?language writeups.

3. What To Watch Next For Crypto Users

The Democratic Party holds the National Assembly majority and has said it will review the proposal, but has not yet committed to abolishing the tax outright. Until a repeal bill is passed, the 2027 start date remains in law.

If abolition succeeds, Korean exchanges like Upbit and Bithumb would operate without a dedicated crypto gains tax, which some analysts expect could restore local volumes and make the kimchi premium a cleaner sentiment signal rather than a workaround for tax rules.

If it fails, traders will be looking at tighter on?chain monitoring and full enforcement of the 22% regime, making accurate record?keeping and venue choice more important.

Conclusion

South Korea has gone from repeatedly delaying a tough crypto tax to seriously considering killing it entirely, driven by fairness concerns and clear evidence of capital flight. For crypto users, the next decisive signal is not another delay, but whether parliament actually votes to delete the 2027 tax from the books, which would reshape incentives for trading onshore versus offshore.