South Korea’s Gyeonggi Province has taken a bold step in the fight against crypto tax evasion with the implementation of a new digital tracking system. This innovative system streamlines the process of tracking crypto assets held by debtors in virtual asset exchanges, significantly reducing the time it takes to collect taxes.
Unveiling the Digital Tracking System
The Gyeonggi Provincial Tax Justice Department introduced the digital tracking system, allowing provincial tax authorities to monitor crypto exchange accounts held by tax evaders with ease. This system marks a significant advancement in the country’s efforts to combat tax evasion involving cryptocurrencies.
Addressing the Challenges of Tax Collection
Previously, the provincial tax department relied on local residential registration and phone numbers to gather information on debtors’ assets, including crypto assets. However, this process was time-consuming and often resulted in lengthy verification processes. The new digital tracking system addresses these challenges by reducing the verification time from six months to just 15 days.
Seizing Crypto Assets from Tax Evaders
The digital tracking system has proven to be highly effective in detecting and seizing crypto assets from tax evaders. In the past year alone, the Gyeonggi tax department identified 5,910 individuals with virtual assets accounts holding over 3 million won (approximately $2,200) in cryptocurrencies like Bitcoin. As a result, the department successfully collected 6.2 billion won ($4.6 million) in taxpayers’ debt by seizing cryptocurrencies from 2,390 people.
Ensuring Fair Taxation and Protecting Honest Taxpayers
Noh Seung-ho, head of the Provincial Tax Justice Department, emphasized the agency’s commitment to protecting honest taxpayers and ensuring fair taxation. He stated, “We will continue to take strong collection action against unscrupulous delinquents who say they do not have money to pay taxes and trade virtual assets.”
Strengthening Cooperation with Crypto Exchanges
The Gyeonggi province plans to reinforce its cooperation with crypto exchanges to enhance the effectiveness of the digital tracking system. The province will also review administrative measures for exchanges that refuse to comply with data submission requests.
South Korea’s Focus on Crypto Exchange Compliance
South Korea’s Financial Intelligence Unit (FIU) has outlined a work plan for crypto exchanges for 2024, focusing on improving anti-money laundering (AML) measures. Non-compliant crypto exchanges face the risk of being banned from operating in the country.
The implementation of the digital tracking system in Gyeonggi Province marks a significant step forward in South Korea’s efforts to combat crypto tax evasion and ensure fair taxation. The system’s success highlights the importance of collaboration between tax authorities and crypto exchanges in promoting transparency and accountability in the cryptocurrency market.
