South Korea to Implement AI for Cryptocurrency Tax Tracking by 2027

South Korea's tax authority is advancing plans to utilize artificial intelligence (AI) in tracking cryptocurrency investment gains as the government edges closer to enforcing a long-delayed tax on digital assets. According to Cointelegraph, the initiative involves developing an AI-backed system to scrutinize cryptocurrency transaction data, aligning with the government's scheduled 2027 tax on digital asset profits. The Korea Times reported that the project, estimated at 3 billion Korean won (approximately $2 million), aims to create a comprehensive platform capable of handling extensive crypto trading data. The National Tax Service (NTS) intends to employ AI and machine learning technologies to identify atypical transaction patterns and detect potential tax evasion. South Korea is reportedly set to commence taxing cryptocurrency investment gains in January 2027, imposing a combined 22% levy on profits exceeding 2.5 million won ($1,700). The NTS plans to select a contractor by March, with system design slated to begin in April. Testing phases are scheduled throughout the year, leading to a pilot program in November, and the system is anticipated to launch between November and December. The platform is expected to aid authorities in systematically managing and analyzing substantial volumes of virtual asset transaction data, supporting tax audits, uncovering hidden income from delinquent taxpayers, and identifying possible tax evasion linked to crypto trading. The tax agency also plans to share analysis data and lists of suspected offenders with other agencies, including the Korea Customs Service and the Bank of Korea. South Korea's crypto tax framework has faced multiple delays despite being approved several years ago. In 2024, lawmakers debated whether to implement the proposed crypto gains tax in 2025 or postpone it further due to industry opposition and political disagreements over tax thresholds. The implementation has already been deferred three times since the law's passage in 2020. The policy would impose a 20% income tax and an additional 2% local tax on annual cryptocurrency gains exceeding 2.5 million won. According to the Korea Times, the tax is now anticipated to take effect in January 2027.