South Korean Government Seizes $138,000 in Crypto from Tax Evaders

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As an analyst with extensive experience in tax compliance and cryptocurrency regulations, I believe that South Korea’s recent crackdown on crypto-enabled tax evasion is a commendable step towards ensuring fairness and transparency in the tax system. The ability to link customers’ wallets to their real identities through mandatory KYC (Know Your Customer) procedures has made it increasingly difficult for tax evaders to conceal their digital assets.

As a crypto investor following news from South Korea, I learned on June 18th that tax authorities discovered undeclared cryptocurrency holdings by scouring the records of five local exchanges: Upbit, Bithumb, Coinone, Korbit, and excluding Gopax. From March to April, they targeted individuals who owed over 5 million won in taxes, which equates to approximately $3,619. Out of the 3,026 individuals under investigation, thirty-one were identified as having crypto wallets on four exchanges, revealing their hidden crypto assets.

In accordance with South Korean legislation, cryptocurrency platforms functioning within the country are obligated to connect users’ digital wallets to their authentic names and verified bank accounts linked to social security numbers. This regulation facilitates the identification of non-compliant taxpayers possessing crypto assets by provincial tax authorities.

In a recent crackdown, cryptocurrency worth approximately $135,000 was confiscated in Jeonbuk Province, six times greater than the $22,500 seized last year from 12 individuals who owed over $3,619 in local taxes. Hwang Cheol-ho, head of the Jeonbuk Self-Governing Province Autonomous Administrative Unit, shared that the authority is becoming increasingly adept at detecting tax evaders’ attempts to conceal their digital assets and will continue this practice. He stated:

The value of virtual assets subjected to seizure has surged over six times greater than the previous year. It’s increasingly apparent that individuals are attempting to hide these assets. Rest assured, we remain committed to meticulously identifying and taxing these assets for both fairness and thoroughness.

The province issued a stern reminder to the 31 tax evaders, threatening to seize and sell their properties if they failed to settle their overdue tax debts. In response, one person decided to promptly pay off their $1,839 tax liability to avoid forfeiting their digital currency holdings.

South Korea’s Broader Efforts to Combat Crypto-Enabled Tax Evasion

South Korean authorities are intensifying their efforts to prevent tax evasion in the cryptocurrency market. In a significant development in March, tax officials in Hwaseong successfully confiscated crypto assets valued at over $768,500 from an individual offender, with approximately $567,000 of this amount taken from one person alone. Additionally, the Gyeonggi province reported in February that they had recovered a total of $4.6 million in unpaid taxes from crypto holdings through an advanced electronic tracking system designed to monitor virtual assets.

The proposed actions aim to decrease tax evasion related to cryptocurrencies and may limit the number of people hiding their crypto income within the nation. Previously, the government issued a warning to crypto asset holders, reminding them to disclose their foreign assets or risk legal consequences. As per the Income Tax Act, individuals possessing over 500 million won in their overseas accounts at month’s end are required to report this information to the authorities by June 30 annually.

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2024-06-19 15:49