- National Tax Service wants private sector firms to build a monitoring system.
- Seoul wants platform to go live in December.
- State will begin taxing crypto traders in 2027.
South Korean tax authorities are turning to tech companies to help them monitor wallets as the country gears up to introduce taxes on crypto trading.
The National Tax Service, or NTS, has asked tech firms to bid for a contract to create a new crypto wallet and transaction monitoring system, South Korean media outlet Hans Kyungjae reported.
Crypto trading is currently untaxed in South Korea. But that’s about to change. While the issue of crypto taxation has become a political hot potato in recent years, a law requiring residents to pay 20% income tax and 2% on their gains over $1,700 will come into force on January 1, 2027.
Individuals who fail to declare their crypto profits correctly could face additional taxes and heavy surcharges at the hands of the NTS, the outlet wrote.
$2m budget
The NTS says it has earmarked about $2 million for the project, in the hope that the developer will use artificial intelligence to comb through transaction data from the country’s five permit-holding crypto exchanges and quickly spot common tax evasion-linked transaction patterns.
Officials will also be able to use the platform to monitor residents’ peer-to-peer transactions and income from crypto derivative investments in real time.
A contractor will be selected on April 14, the service said, and will then be given eight months to complete the platform.
The service wants beta testing to begin in November, with an official launch pencilled in for December.
Political point-scoring
South Korean lawmakers first voted to introduce crypto taxation back in 2020. But they’ve voted to delay crypto tax three times, amid pushback from the crypto community.
Politicians on both sides of the National Assembly have also promised to delay crypto tax ahead of legislative and presidential elections, in the hope of winning votes from younger voters.
Lawmakers are currently mulling proposals to include crypto airdrops and staking rewards in tax calculations.
The new platform, with its capacity to analyse blockchain data, will help the NTS do precisely that, unnamed experts told South Korean newspaper Seoul Kyungjae.
Tax officials already use data from South Korean exchanges to seize coins from people who fail to pay their local taxes and traffic fines.
Tim Alper is a News Correspondent at DL News. Got a tip? Email him at tdalper@dlnews.com.
