South Korea will begin crypto tax on profits in 2027 while officials prepare reporting systems, AI monitoring tools, and stronger digital asset oversight measures.
South Korea has officially confirmed plans to begin taxing crypto profits from January 2027. After a few postponements in the past years, the government has announced its intention to proceed with the taxation of virtual assets. The country is also readying up more robust monitoring systems ahead of the new rules, officials said.
The update was shared by the Ministry of Finance and Economy’s Moon Kyung-ho at an emergency forum in Seoul. The event was held at the Yeouido National Assembly Members’ Office Building. Moreover, the forum discussed how South Korea should handle the fast-growing crypto market.
South Korea Moves Ahead With Long-Delayed Crypto Tax
The new law will cover the annual crypto gains exceeding KRW 2.5 million, which is equivalent to nearly $1,800. Those who invest more than that will be taxed at a rate of 22% in total. This includes 20% national income tax and 2% local income tax.
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The government has also announced that crypto gains will be classified as “other income.” Thus, they will not be subject to capital gains tax. The policy will include profits from trading, lending virtual assets, airdrops and staking rewards.
The first tax filings related to these earnings are expected to occur in May 2028, officials said. The profits made by investors in 2027 are subject to reporting the next year. Meanwhile, authorities are getting ready to record accurate transactions.
The NTS is currently collaborating with the country’s biggest cryptocurrency exchanges. These include Upbit, Bithumb, Coinone, Korbit and Gopax. The aim is to create reporting systems that will be able to accurately track crypto transactions.
The National Tax Service is developing an official notice on the tax system, Moon Kyung-ho said. He later clarified however that the notice would not be sent immediately. Rather, the announcement will be made later this year once reviewed by the legislature.
Previously, South Korea had been delaying crypto taxation due to political differences and technical issues. But now it seems officials are set on finishing the process before 2027. Consequently, investors and exchanges are getting ready for the big changes.
AI Monitoring Expands as Crypto Rules Become Stricter
South Korea also beefed up its AI-based crypto monitoring systems earlier this year in 2026. The Financial Supervisory Service enhanced its Virtual Assets Intelligence System for Trading Analysis (VISTA). This system automatically identifies suspicious trading activity based on machine learning.
Authorities think that AI can be used to prevent price manipulation and potential tax evasion. In addition, the government has made extra investments in these monitoring systems. As trading volume keeps increasing at a rapid pace, the crypto market has become more complex, officials say.
Even with these preparations, the crypto tax is still a politically charged issue within South Korea. Some critics say that the tax is unfair because it is not the same as the tax on stocks. Recently, taxes on investments related to stocks were abolished, but taxes on crypto were still in effect.
Opposition People Power Party has already tabled a bill to have the crypto tax withdrawn indefinitely. Members of the party expressed fears that high taxes might drive investors to foreign exchanges. They are also worried that some local trading activity may go beyond the border of South Korea.
However, government officials feel that the right tax measures should be implemented as the crypto market continues to grow. Authorities also say that better regulations would help protect investors and boost transparency. As a result, South Korea is still working to tighten the regulations on the digital asset industry.
The new ruling demonstrates South Korea’s desire for more regulation of crypto trading. Meanwhile, the authorities are juggling innovation with the need for more robust financial oversight. The next few months will be crucial in shaping investor, exchange and lawmaker reactions to the new tax before it takes effect in 2027.