South Korea to use AI system to tax cryptocurrency profits

The platform uses artificial intelligence and machine learning to process large amounts of cryptocurrency trading data.

Korean cryptocurrency news

South Korea’s National Tax Service has launched a tender to procure an AI-powered platform to track virtual currency transactions. The system is designed to detect tax evasion and support enforcement of the country’s planned digital asset tax. The project is valued at approximately 3 billion Korean won, or approximately $2 million.

The platform uses artificial intelligence and machine learning to process large amounts of cryptocurrency trading data. Flag unusual trading patterns that could indicate hidden income or unpaid taxes. The National Tax Service plans to share the list of suspects with the Customs Service and the Bank of Korea.

According to the Korea Times, the tax authorities plan to select a contractor by March. System design will begin in April and testing is expected to run throughout the year. A pilot program is scheduled for November, and the full system is expected to be operational by the end of 2026.

South Korea plans to start taxing cryptocurrency investment profits in January 2027. This policy imposes a tax rate of 22%, including a 20% income tax and a 2% local levy. The tax applies to profits exceeding 2.5 million won (approximately $1,700) per year.

The law behind this tax was passed in 2020 but has been delayed three times since then. In 2024, lawmakers debated whether to implement it in 2025 or postpone it further. Industry opposition and disagreements over tax standards contributed to each postponement.

NTS said the AI platform will provide authorities with a structured way to manage the growing amount of virtual asset data generated by Korean investors. The agency did not say how many taxpayers it expects the system to identify once it goes live.

This procurement bid marks a concrete step towards enforcement infrastructure ahead of rollout in 2027. South Korea has also joined the list of governments building dedicated tools for CryptoTax compliance. The size of the investment indicates that the current schedule is intended to be maintained.

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