South Korea's National Tax Service will deploy commercial wallet-tracing software to enforce its 2027 crypto income tax on private wallets and overseas exchanges. The agency says tracking self-custodied transfers remains difficult, so it plans to lean on the same tracing tools used by prosecutors, police and the U.S. IRS, plus OECD data-sharing for offshore accounts.
Tax agency turns to wallet-tracing software
South Korea's National Tax Service (NTS) will introduce commercial software capable of tracing and analyzing digital asset movements between wallets, tools similar to those used by prosecutors, police and the U.S. Internal Revenue Service. The agency disclosed the plan in responses to lawmaker Kim Sang-hoon, reported by Digital Asset on Aug. 31.
The move targets a gap in the incoming crypto tax: authorities have limited visibility into transactions run through wallets that taxpayers control directly. The NTS acknowledged that identifying every unreported private wallet transaction is difficult because taxpayers, not exchanges, hold the assets.
Self-custody will not exempt taxpayers
Self-custody does not remove a taxpayer's liability under the planned regime. South Korea's Ministry of Economy and Finance and the NTS have said income from transferring or lending digital assets is taxable regardless of whether the assets sit in a private wallet or on an overseas exchange.
The tax applies to qualifying income generated from Jan. 1, 2027. Annual gains above a 2.5 million won deduction face a 20% national tax plus a 2% local tax, a combined 22% rate. The first returns covering that income will be filed in May 2028.
CARF data plugs the offshore gap
For assets held on foreign platforms, South Korea plans to draw on the OECD's Crypto-Asset Reporting Framework (CARF) to obtain transaction data from participating jurisdictions. The United Arab Emirates, home to major international crypto businesses, will apply CARF from the 2027 calendar year, with its first information exchange expected in 2028. A Ministry of Economy and Finance official said this would not necessarily create a one-year gap, since the 2028 exchange would cover transactions conducted during 2027 — matching South Korea's own filing timetable.
South Korean authorities have already moved on related fronts. The Cabinet approved rules in August requiring domestic exchanges to run suspicious-transaction monitoring on transfers of at least 10 million won involving overseas exchanges or private wallets. Separately, officials proposed a framework in July for seizing self-custodied crypto during enforcement proceedings, including warrant requirements and court-supervised joint wallets.
Political resistance persists. People Power Party lawmakers have pushed to repeal the tax or delay it to 2030, and lawmaker Park Soo-young has argued it could push Korean investment capital toward overseas platforms. The government has kept the 2027 start date unchanged so far, though the National Assembly can still amend the provisions before they take effect.
Source: crypto.news
Trading involves risk.
Risk Disclaimer
