Despite the South Korean Government’s deep interest in metaverse and web 3 technology, the country implements aggressive policies when it comes to regulations and taxation.
As reported by local news outlet Yonhap News on Thursday, the South Korean Tax Authority has seized 260 billion won ($184.3 million) in crypto belonging to tax evaders. However, the agency froze that amount in a timeframe between 2021 to 2022.
The highest amount confiscated from a single tax evader is notably $8.87 million, per the data provided by the country’s lawmaker Kin Sang Hoon. He reported that the defendant held Bitcoins and Ripple’s XRP, among other crypto assets.
It is worth noting crypto exchanges under the implied rule in South Korea are liable to provide data about their customers to tax authorities. Similarly, the agency has been cracking down on tax evaders since the beginning of this year and confiscated crypto assets in millions.
Tax authority freezes crypto assets of tax evaders after the exchanges identify delinquents on the platforms. Then, if the tax amount remains unpaid, officers sell the confiscated holdings at the market price.
The report on seizures of crypto assets against unpaid tax comes two months after the South Korean authorities announced that the decision to apply 20% taxes on crypto profits had been postponed to 2025.
Kim Sang-hoon, a member of the National Assembly’s Strategy and Finance Committee and a lawmaker of South Korea’s right-wing People Power Party, gathered information about the seizures of crypto assets. The report also includes stats from the finance ministry and other agencies.
South Korea Features Tougher Regulations
After the TerraLuna collapse, the state authorities heated up on crypto regulations. Regulators scrutinized many cryptocurrency exchanges operating within South Korea. Consequently, the investigations that lasted for long months led South Korean authorities to implement strict laws excessively focused on the risks involved with cryptocurrencies.
Thereafter, many crypto exchanges closed their shops due to tightened KYC and AML rules. While others currently operating in the regime provide data to the government about customers under the implied regulations.
Although South Korean authorities initially started freezing crypto assets of tax dodgers in 2020. The Tax Law Amendment Bill of 2021 empowered National Tax Service (NTS) by authorizing it the power to seize crypto assets without waiting for court approval. The act came into force on January 1, 2022.
An official explained that this amendment aims to fight the growing number of tax evaders who use cryptocurrencies in order to escape their assets.
The ministry official added at the time;
“Property seizure procedures cannot be applied when the assets to be claimed by the government are kept in electronic wallets. The revision will allow direct seizing without court-approved change in ownership records. Assets held by tax dodgers in the form of digital coins will no longer evade seizure and forfeiture.”
Featured image from Pixabay and chart from TradingView.com