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South Korea has proposed to introduce new tax regulations to debunk tax evaders using cryptocurrency. The regulators seek to get permission for tax authorities to impound crypto assets that are stored away by tax evaders in individual wallets. The expanding crackdown on crypto comes as part of financing the rising welfare costs of the nation.
Korean government has drawn up 2021 #tax revision bill with focus on ▲securing new growth engines through R&D, facility investment #incentives ▲supporting recovery by enhancing #inclusive growth amid deepening income gaps caused by #pandemic ▶ read more https://t.co/cZKsjHpP7u
— MOEF – Korea (@moefkorea_eng) July 26, 2021
Seize assets in Individual wallets
Current regulations restrict authorities from seizing virtual assets held in individual digital wallets. However, the ones that are accessible through exchanges can be impounded to pay the overdue taxes. This proposal is the Korean government’s initiative to review the tax codes annually and aim to evaluate and edit over 16 existing tax codes, according to Reuters.
South Korean crypto crackdown aims to impose stricter regulation on the crypto markets to sweep the digital assets market clean, including the anti-money laundering regulations and probing for cyber and economic crimes using cryptocurrencies.
According to President Moon Jae-in, the authorities are seeking expansion of tax regulation to cover the prior economic and social losses in the nation. Furthermore, the government has also proposed extending tax imposition on organizations that are employing outside of Seoul and decrease the corporate income tax for firms that are employing within the nation.
20 percent tax on crypto
In February, the Ministry of Economy and Finance of South Korea announced that deep-pocket investors earning over 2.5 million won from the crypto trade will be liable to pay 20 percent tax from next year.
Inheritances and gifts in form of cryptocurrency will also fall under the tax umbrella. The price of the asset will be calculated based on the daily average price for one month before and one month after the date of the inheritance or gift.
Regulatory action against foreign exchanges in Korea
Korean crackdown of the crypto sphere is not limited to imposing tax regulations. Recently, over 27 foreign cryptocurrency exchanges with business operations in Korea were notified by the Korea Financial Intelligence Unit (KFIU) to register with it, in accordance with the latest Korean AML regulations. Cryptocurrency exchanges are also required to acquire a certificate in information security from the regulators.
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