South Korea’s Tax Chief Nominee Vows to Strengthen Crypto Oversight

South Korea’s nominee for the Commissioner of the National Tax Service (NTS), Lim Gwang-hyun, has vowed to strengthen oversight of digital asset transactions and expand cross-border information sharing to counter tax evasion. During a National Assembly hearing on July 15, Lim addressed several tax-related issues, emphasizing the need for an enhanced tax evasion detection system. He proposed the establishment of a virtual asset transaction history collection system to detect abuse early and enhance the detection system by applying artificial intelligence to past tax investigation cases.

Lim also highlighted the importance of monitoring new forms of tax avoidance, including activities involving virtual assets. He explained that inputting basic data such as financial statements could trigger automated detection of suspicious activity. In addition to domestic efforts, Lim said he would “block the outflow of national wealth” by “expanding tax information exchange with foreign countries and diversifying overseas information collection channels for intelligent anti-social overseas tax evasion.”

Lim’s remarks underscore South Korea’s commitment to advancing the capital market while responding resolutely to stock price manipulation, irregular capital transactions by controlling shareholders, and illegal profiteering. He emphasized the need for a ‘pinpoint tax administration’ that focuses tax administration capabilities on areas that require tax justice. The hearing was part of the confirmation process for Lim’s appointment to lead South Korea’s tax authority.

While South Korea sharpens its enforcement tools, global authorities are also stepping up efforts to track crypto-linked tax evasion. The OECD has finalized its Crypto-Asset Reporting Framework (CARF), which mandates automatic information exchange on digital asset holdings across jurisdictions. Several G20 nations have pledged to adopt the rules by 2027, indicating an international alignment on tax transparency in crypto markets. However, implementation remains uneven, with some jurisdictions continuing to serve as havens for anonymous or lightly regulated crypto activity, complicating audit trails for tax authorities.

As national regulators like Korea’s NTS adopt AI and real-time tracking systems, cross-border coordination will likely become a key test of whether global tax enforcement can keep pace with digital finance. The use of AI in tax enforcement raises questions about false positives, algorithmic transparency, and the risk of disproportionate scrutiny on small or uninformed investors. International tax data exchange must comply with local data protection laws, which can slow down implementation or restrict what types of user data are shared across borders. Centralized exchanges are increasingly required to report user data under AML and tax laws, with some platforms already sharing information with tax authorities under agreements like the Common Reporting Standard.