March 27, 2024
South Korea Tracks Crypto Tax Evaders with Digital System
Latest Cryptocurrency News

South Korea Tracks Crypto Tax Evaders with Digital System

The Gyeonggi Provincial Tax Justice Department, situated in the most densely populated province in South Korea, achieved noteworthy success in tax collection through the implementation of a digital tracking system targeting cryptocurrency accounts of tax evaders. In 2023, the department managed to collect 6.2 billion won ($4.6 million) in non-declared taxes using innovative methods.

As reported by Yonhap News Agency on February 22, the tax department utilized resident registration data to identify “delinquents,” employing their mobile phone numbers to trace accounts on digital asset exchanges. The key advancement was the introduction of a digital tracking system, streamlining the process of gathering information from crypto exchanges, which previously required individual requests and could take up to six months. The new digital management system developed by the province drastically reduced this timeframe to around 15 days.

The provincial tax department successfully identified 5,910 individuals with crypto accounts, each owing more than 3 million won ($2,200) in local taxes. From these findings, the department collected 6.2 billion won ($4.6 million) from 2,390 offenders.

Looking ahead, the province plans to enhance collaboration with virtual asset exchanges and consider “administrative measures” for platforms unwilling to cooperate. Noh Seung-ho, the head of the Provincial Tax Justice Department, emphasized the commitment to reinforcing efforts in this regard, stating:

“We will continue to take strong collection action against unscrupulous delinquents, such as those who say they have no money to pay taxes and trade virtual assets.”

Simultaneously, South Korea’s Financial Intelligence Unit (FIU) has been actively encouraging crypto exchanges to report suspicious transactions related to money laundering and illegal “foreign exchange outflow.” The agency is set to launch a “virtual asset analysis system” to track and analyze transaction details and complex movement paths of virtual assets.

In early February, the South Korean government updated the Virtual Asset Users Protection Act, imposing stringent criminal punishments and fines for violations. This includes fixed-term imprisonment of over one year or a fine ranging from three to five times the amount of illegal profits. Those engaged in illegal crypto trading schemes, yielding more than 5 billion won ($3.8 million), may face life sentences. The regulatory landscape in South Korea reflects a proactive stance toward addressing tax evasion and illicit activities in the cryptocurrency space.

Image by rawpixel.com on Freepik

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