A mass petition forcing lawmakers to revisit South Korea’s long-delayed crypto tax plan has cleared the threshold for formal review — setting up a showdown between investors, some politicians and tax authorities over a policy due to take effect in 2027. What happened - The “Petition for the Abolition of Taxation on Virtual Assets” surpassed the National Assembly’s automatic-review threshold of 50,000 signatures on May 21 — just eight days after it was posted. It has since topped roughly 53,000 signatures and will now be examined by the Assembly’s Finance, Economy and Planning Committee, which will decide whether to send it to the plenary session. Tax rules at issue - The contested law would tax crypto gains as income at rates up to 22% beginning January 1, 2027, for annual profits above 2.5 million won. The Income Tax Act containing those rules was first proposed for implementation in January 2022 but has been postponed three times. Arguments from petitioners - The petition argues the tax is unfair and short-sighted given recent moves to abolish the financial investment income tax aimed at boosting capital markets. Signers claim the current approach prioritizes revenue collection over industry competitiveness and risks long-term harm — including industry contraction and the outflow of capital and talent. - It also criticizes the timing: petitioners say tax enforcement is being pushed forward before critical market infrastructure is in place, such as short-selling rules, listing reviews, investor protection funds and robust systems to detect unfair trading. - The petition calls for a “fundamental review” of the taxation regime and even raises abolition as an option, rather than mere postponement or minor changes. Political responses and likelihood of change - The People Power Party (PPP) last month proposed an amendment to remove crypto taxation provisions from the Income Tax Act. PPP floor leader Song Eun-seok argued a separate crypto tax would undermine fairness and consistency, referencing U.S. regulatory guidance that treats many digital assets more like commodities than securities. - Despite the petition and the PPP bill, observers and some officials view abolition or additional postponement as unlikely. Parliamentary petitions rarely produce legislative reversals, and many government agencies appear committed to the 2027 implementation timeline. Tax authority preparations - The National Tax Service (NTS) has signaled it is moving ahead. Park Jeong-yeol, Director of the NTS Individual Taxation Bureau, said the agency has begun gathering exchange data and building the tax infrastructure needed to implement comprehensive income taxation of crypto. - The NTS is also fast-tracking an AI-driven system to track crypto investment gains, aiming for full-scale operation by the end of the year. What to watch next - The Finance, Economy and Planning Committee review and any decision to refer the petition to the Assembly plenary. - Progress of the PPP’s amendment bill and broader parliamentary debate. - NTS data collection efforts and the rollout of its AI tax-tracking system — developments that will signal how vigorously the government will enforce the 2027 rules if they remain intact. The petition victory gives critics of the tax a louder voice and forces lawmakers to put the issue on the formal agenda — but the ultimate outcome will depend on committee deliberations, competing bills, and the government’s enforcement timetable. Read more AI-generated news on: undefined/news