Tax agency embarks on tracking system for crypto investment gains for more revenue collection

The headquaters of the National Tax Service in Sejong / Yonhap

The National Tax Service (NTS) has begun preparations to build a tracking system to levy taxes on cryptocurrency investment gains, in line with the government’s expansionary fiscal policy and the need for additional revenue, the agency said Thursday.

The move comes particularly ahead of the government’s plan to begin collecting taxes on profits from virtual assets from January next year.

The tax agency said it opened a bid to build an integrated system aimed at analyzing virtual asset transactions for corresponding taxation.

The project, worth 3 billion won ($2.02 million), was posted on the electronic bidding platform operated by the Public Procurement Service, which is responsible for procuring goods and services for the government and related organizations.

A successful bidder will be selected and contracted within this month.

The system design will begin in April and, following various test runs, a pilot operation will begin in November. The system will be ready for launch between November and December.

“It is expected to serve our goal of collecting individuals’ virtual asset transaction data starting in 2027,” the NTS said.

The tax agency said by systematically managing and analyzing the large volume of transaction data, it can better detect possible tax evasion, including through tax audits and by identifying the hidden income of delinquent taxpayers.

In particular, the NTS plans to use artificial intelligence and machine learning to analyze and track unusual transaction types and patterns.

It also intends to share virtual asset analysis data and lists of suspected offenders with other government agencies, including the Korea Customs Service, Ministry of Data and Statistics and Bank of Korea.

A total tax rate of 22 percent — including a 20-percent income tax and a 2-percent local income tax — will be applied to virtual asset income exceeding 2.5 million won from January next year.