South Korea’s National Tax Service has combined forces with the Ministry of Strategy and Finance, and other agencies as well as local government authorities, to seize over $184 million worth of Bitcoin (BTC) and altcoins from alleged tax evaders in the region since 2021, according to reports on September 22, 2022.
Korea Clamp Down on Crypto Tax Defaulters
Despite the promises of South Korean newly elected president Yoon Suk-yeol to suspend cryptocurrency taxation until 2025 due to the current gloomy market conditions, and to enable the government to formulate amenable policies for the industry, authorities in the nation have continued to carry out nationwide seizures of crypto assets belonging to alleged tax evaders.
According to a local news platform, Yonhap, South Korea’s Ministry of Strategy and Finance, the Ministry of Public Administration & Security, the National Tax Service, and authorities in 17 cities and provinces, have collaborated to seize about 260 billion won (roughly $184.6 million) worth of BTC, XRP and several other crypto assets from investors since last year.
The authorities reportedly obtain the data of crypto holders from local exchanges and use this information to hunt down tax defaulters. Residents of Seoul, Incheon, and Gyeonggi province were affected the most by the operation as their assets accounted for about 30 percent of the total crypto seized.
Crypto Taxation Better than Blanket Bans
The largest amount of crypto seized from a single individual is about 12.49 billion won ($8.87 million). The unnamed Seoul resident allegedly owed the government 1.43 billion won in taxes and held millions of dollars worth of 20 different cryptocurrencies, including Bitcoin and XRP.
Commenting on the exercise, Rep. Kim Sang-hoon condemned the actions of the affected crypto investors, saying “It’s a serious moral hazard to intentionally default on taxes even with hundreds of millions of won in assets.”
The South Korean government first introduced taxes on crypto trading in 2020 and the controversial legislation took effect in 2021, with authorities giving local crypto exchanges the mandate of submitting the report of users’ crypto transactions. Since introducing crypto taxes the Korean government has intensified efforts to fish out tax evaders.
While its Asian neighbor China, has since placed a blanket ban on cryptocurrency trading activities, and Bitcoin mining, the Korean government has chosen to tread the path of crypto taxation instead, and reports show that a good number of residents welcome the development.
Elsewhere, the Indian government introduced a 30 percent capital gains tax on crypto transactions in April 2022. However, that move is having a negative effect on the nation’s once fledgling crypto space, as trading volumes on exchanges, have crashed significantly since that time.
Indonesia has also introduced taxes on crypto transactions since April 2022.
Though some industry players are of the opinion that crypto taxation will go a long way in legitimizing blockchain-based virtual currencies globally, the issue remains quite a controversial one, and only a few percent of investors across various jurisdictions file their correct crypto taxes. At press time, the Bitcoin price is hovering around the $19,139 region.