South Korea steps up crackdown on tax evasion via cryptocurrency

South Korea’s tax authorities are going after individuals who evade taxes using cryptocurrencies and other means. It is targeting individuals who owe more than 10 million won ($8,800) in taxes, while also recovering cash, bonds and other hidden assets.
South Korea’s National Tax Service is stepping up its efforts to combat tax evasion and is currently focusing on cracking down on the use of cryptocurrencies to conduct such illegal activities.
According to The Korea Herald, the tax agency has uncovered more than 2,400 tax evaders who used cryptocurrencies to hide assets worth more than 36.6 billion won ($32 million) from the government.
The NTS said it was targeting individuals who owed more than 10 million won ($8,800) in taxes, while also recovering cash, bonds and other hidden assets.
In fact, the agency reportedly plans to conduct a deeper investigation into some of the individuals caught in the tax evasion scheme.
As part of the investigation, the NTS contacted the country's crypto exchanges to obtain detailed customer transaction reports. Given South Korea's strict regulation of the crypto space, digital currency transactions can only be conducted through real-name accounts tied to banks and other financial institutions.
In fact, domestic exchanges may soon start facing stiff penalties for not complying with customer identification laws. Major platforms such as Bithumb are already upgrading their anti-money laundering protocols.
The agency’s focus on tax evasion through cryptocurrencies comes amid reports of a surge in crypto trading activity in South Korea. As Cointelegraph previously reported, market activity on the country’s major exchanges briefly surpassed data from the South Korean stock market on Sunday.
According to NTS data, the number of crypto investors in South Korea has increased by more than 300% in the past 12 months. This growth has also led to an eight-fold increase in the country’s digital currency trading volume.
For the NTS, investigations into individuals using cryptocurrencies to evade taxes are part of its campaign to combat “social tax evasion.”
Meanwhile, the government plans to impose a 20% capital gains tax on cryptocurrency trading profits exceeding $2,300, which will take effect on January 1, 2022. (Cointelegraph)