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- South Korea’s tax authorities are building a system to monitor all individual crypto transactions.
- Blockchain wallet tracking will expose unreported income, gifts, and laundering.
- Virtual asset taxation will start next January, with stricter enforcement expected.
Seoul – The National Tax Service (NTS) is stepping up its digital enforcement ahead of virtual asset taxation. Starting January next year, all crypto income will be taxable. To prepare, the NTS is developing a system to analyze individual investors’ transaction histories with precision.
The service also plans to connect data related to the exchange of virtual assets with blockchain wallet addresses. This will enable the tracking of money movement between domestic and international accounts. The idea is to curb tax evasion before the implementation of the regulations.
The Public Procurement Service has confirmed that NTS has issued a tender for the “Virtual Asset Integrated Analysis System Construction Project.” The system will be the key infrastructure for monitoring taxpayers’ assets in real time.
NTS to Launch Crypto Transaction Tracking System
The NTS will begin accepting project proposals next month. The officials will begin bidding on the 9th of that month and announce the final contractor on the 14th. The system will take eight months to construct. After authorities complete integrated testing and pilot operations in November, they will launch it in December.
The authorities will stabilize the system for a month before utilizing it for monitoring all individual crypto-asset transactions starting January. The project will enable the authorities to create a three-dimensional analysis network.
This will be done by combining exchange statements, overseas financial reporting, and information on on-chain transactions. The NTS will be able to create a coin account based on wallet addresses obtained through these sources for up to five years. This will be done in order to track irregular gifts, money laundering, and other unreported activities.
South Korea Expands Crypto Tax Monitoring System
The NTS is examining plans for taxation on airdrops, staking, and other types of virtual currency income. In the past, peer-to-peer and derivative transactions were hard to track. This new system will include these transactions in the tax net. It has been termed the “Coinpan NTIS” by authorities, implying that they will be monitoring individual assets closely.
The authorities will retain the existing tax regulations. Authorities will treat virtual assets like other intangible assets. They will tax these assets at a rate of 22% as miscellaneous income, including local taxes. There will be no carryover of losses.
There will be additional taxes for investors who do not document transactions that the system has recorded. This policy may spark a debate on fairness, and it may face resistance from people who hold virtual currency.This is a new era for digital financial management in South Korea.
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