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- New measures include increased tax loads on the wealthy class and conglomerates
- NTS is increasingly focusing on the trend to use cryptocurrencies for tax evasion
- New laws will permit the confiscation of tax evaders’ crypto assets directly from their digital wallets.
South Korea is bringing in new regulations which will permit government agencies to seize tax evaders’ crypto assets directly from their wallets. In addition, South Korea is looking at ways to expand its tax base.
South Korean lawmakers propose to revise tax codes to enable tax officials to seize tax evaders’ crypto assets directly from their digital wallets. According to a report published on July 26, the proposal forms a broader initiative at the annual review of the country’s tax system. In addition, South Korea is facing the ever-increasing welfare costs of an aging population, and lawmakers are looking at alternatives to widen the tax net to augment the tax earnings. As a result, the legislators are looking to amend a total of 16 existing tax codes.
Cracking down on money laundering and tax evasion in sectors like the digital assets industry
The revisions include increasing tax loads on the wealthy class and conglomerates. The measures also include cracking down on money laundering and tax evasion in sectors like the digital assets industry. The highly decentralized nature of cryptocurrencies and anonymity makes it a perfect front for money laundering and other tax evasion activities. The new laws will empower authorities to confiscate tax evaders’ crypto assets directly from their digital wallets.
The latest revision will slightly diminish the tax collections- $1.3 billion – in tax revenue for the government. However, this has been caused due to proposals for specific tax breaks to spur research and development in semiconductors, batteries, and vaccines. In addition, tax incentives are also being proposed for firms looking to hire labor outside of the capital, Seoul, and those looking to restore their production capacities.
South Korea is to levy a 20% tax on Bitcoin (BTC) and crypto profits.
The Finance Ministry will place the proposals before the parliament by September 3. The measures will have to be approved by the lawmakers before they can become effective. South Korea proposed levy a 20% tax on Bitcoin (BTC) and crypto profits starting January 1, 2022. The move has been bitterly opposed and has faced significant pushback from the industry. The new regime will charge a 20% tax on all crypto trading capital gains over $2,300.
The National Tax Service of South Korea is increasingly focusing on the trend to use cryptocurrencies for tax evasion. According to a leading daily, the NTS has identified more than 2,400 tax evaders who used cryptocurrencies to hide assets worth over 36.6 billion won ($32 million) from the government.
The NTS targets those citizens who have more than 10 million won ($8,800) in tax defaults while also recovering cash, bonds, and other hidden assets. The agency is now seeking to widen its scope of the investigation and conduct a deeper probe of some of the individuals caught in the tax evasion scheme.
As a part of the ongoing investigation, the tax sleuths have liaised with exchanges in the country to obtain detailed customer trading reports. Cryptocurrency trade is tightly regulated in South Korea, and trading is possible only with real-name accounts tied to banks and other financial institutions.
In April, Seoul’s tax authorities confiscated $22 million in crypto from individuals and company executives who owed outstanding taxes.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
