South Korea Proposing Revision of Tax Code to Allow the Confiscation of Crypto Assets of Tax Dodgers
South Korea is now considering tightening its crackdown on tax evasion by cryptocurrency investors and high-income earners, said the finance ministry on Monday.
The government is proposing to revise tax codes that will allow tax authorities to seize tax dodgers’ crypto assets even if they are held in digital wallets, starting next year.
While virtual assets held on exchanges can be seized to pay overdue taxes, current regulations don't allow confiscation of those stored in digital wallets.
This move is part of the country's broader plan to tighten oversight of crypto markets to combat money laundering and other financial crimes using cryptocurrencies.
According to the statement, the tax review will be sent to parliament by Sept. 3 as the proposal needs approval from lawmakers to make it enforceable. This is just one part of the government’s once-a-year review of its tax system, which seeks to revise a total of 16 tax codes.
Interestingly, the revision will lead to a decline of at least 1.5 trillion won ($1.30 billion) in tax revenue between now and 2026 as tax breaks for research and development in vaccines, batteries, and semiconductors sectors more than offset any additional revenue expected, according to the ministry.
But finance minister Hong Nam-ki said at a news conference that “it isn't that big of an amount and something necessary as we revised tax codes.”
President Moon Jae-in looks to expand the tax base to cover the rising welfare costs. In this context, the government has already been hiking taxes from conglomerates and big earners.
South Korea became the world’s fastest-aging society with the lowest birth rate in 2020. With this move, the government wants to ensure that wealthy citizens share the burden of the growing costs of an aging population.