South Korea's Tax Agency Opens Bidding for Crypto Tracing Tool

South Korea's National Tax Service (NTS) has put out a tender for a software solution to monitor virtual currency transactions in real time — the first step in developing an enforcement system for the new tax on cryptocurrency, which has been postponed three times.

The project, titled "Virtual Asset Tax Evasion Response Transaction Tracking Software Licenses," has a total budget of 146.5 million won, or about $99,500. Proposals will be accepted between April 28 and April 30, with evaluations occurring on May 7.

Considering the size and scale of virtual currency, $99,500 is not very much money at all. For instance, Coinbase — one of the largest exchanges in the world — charges upwards of $100,000 for a single mid-tier software subscription. Therefore, the significance of NTS now officially beginning work on an infrastructure for enforcement ahead of the launch of the new crypto tax despite the numerous previous delays is the primary takeaway from this information.

What the Software Is Supposed to Do

While the procurement notice shows that the NTS is investing significant resources into AI applications, there is not much hard data provided with respect to the amount to be spent and when they will be delivered. Furthermore, ZDNet Korea has reported that an NTS official gave a more detailed description of exactly what the NTS's new platform will do — allowing officials to monitor crypto transactions in real time, visualize transfers between specific wallet addresses and exchanges, and support probes into hidden assets, offshore tax evasion, and unreported inheritance or gift transfers.

The Korea Times reports that NTS is also looking to establish a second AI-assisted platform that will be able to analyze crypto trades globally, placing critical importance on tax fraud identification. This second platform aims to help the NTS scientific investigation unit and other investigators by allowing the tax agency to share its findings with such agencies as the Korea Customs Service and the Bank of Korea.

Taken as a whole, the second AI platform is distinct from the software licensing agreement and represents an estimated total of approximately 3 billion Korean Won ($2,022,691) as reported on the Public Procurement Service's online bidding platform.

The Tax That Won't Sit Still

The implementation of South Korea's cryptocurrency capital gains tax has been in legal limbo since the law passed in 2020 — it has been delayed three times — most recently from 2025 to 2027 — due to investor opposition and technical hurdles, a move that one senior researcher called "unprecedented" among major global economies. Under this law, all gains on cryptocurrencies over 2,500,000 won (approximately $1,700) per year would be taxed at a total of 22% (20% income tax + 2% local tax). There has been significant political opposition and many disputes between members of Congress and the crypto industry regarding the minimum taxable amount and if there are sufficient infrastructure in place to support the enforcement of these taxes. A common point of interest: it is difficult to enforce a tax on an investment if you cannot track it in any way.

This is likely the reason why the NTS (National Tax Service) is currently working on implementing its tracing tool, only two-and-a-half years out from the anticipated date of the first taxes due under this law.

Key Details at a Glance

Why This Matters Beyond South Korea

South Korea is one of the countries with the most active retail markets for cryptocurrencies — the country's cryptocurrency market surged to nearly 108 trillion won ($77.5 billion) in the second half of last year, with 20% of the population now trading digital assets. The South Korean government has a different law enforcement scenario compared to other countries, as it will be able to monitor real-time, from wallet to wallet and also catch those who do not declare inheritance or who move their money out of the country via an offshore account.

The contractor evaluation to determine which software vendors are in contention is taking place in early May. Chainalysis, Elliptic and other blockchain analytics companies are already supplying software that has been contracted to other governments, including the US, and several European countries, andthe NTS's effort follows a broader bid opened in March for an AI-backed platform to analyze crypto transaction data globally. The open question will be whether South Korea works with an international vendor or a local vendor.

According to The Korea Times, the systems design phase is expected to commence in April of this year, with a testing period throughout the year and a pilot programme scheduled for November. Full deployment is expected to be completed by the end of 2026, so that it will support tax enforcement when the new tax is implemented.

The Practical Reality

South Korean crypto holders should not expect the 2027 deadline to pass quietly. The NTS is not waiting for the law to finalize before building its tools. It is already procuring software, designing systems, and coordinating with other agencies. Whether the tax survives further political challenge is still open — analysts warn that core deficiencies in the taxation framework remain unresolved, raising the prospect of a fourth delay. But the enforcement apparatus is being assembled now, and that is worth watching regardless of where the legislative fight ends up.