South Korea's tax authority is set to implement artificial intelligence to monitor cryptocurrency investment profits, moving closer to a long-anticipated digital asset tax. The National Tax Service (NTS) is initiating a bidding process to develop an AI-powered system capable of analyzing vast amounts of crypto trading data. This initiative is in preparation for the planned 2027 tax on digital asset gains, a project valued at approximately $2 million.
The system will utilize AI and machine learning to identify irregular transaction patterns and detect potential tax evasion. South Korea is reportedly preparing to levy a combined 22% tax on cryptocurrency profits exceeding roughly $1,700, effective January 2027.
The NTS plans to select a contractor by March, with system design commencing in April. Testing and a pilot program are slated for later in the year, aiming for a full launch between November and December. This platform is designed to systematically manage and analyze virtual asset data, aid tax audits, uncover hidden income, and collaborate with agencies like the Korea Customs Service and the Bank of Korea.
South Korea's crypto tax framework has faced multiple postponements since its initial approval. Lawmakers have debated implementation dates amidst industry concerns and political disagreements. The policy, when enacted, will impose a 20% income tax plus a 2% local tax on annual crypto gains surpassing 2.5 million won.