The Korea Herald reported that a representative of the National Tax Service (NTS) of South Korea intended to take harsh measures against tax evasion tactics based on virtual assets, such as cryptocurrency, and platforms using them.
The official claimed on Monday that an increasing number of Koreans are apparently attempting to avoid paying taxes by investing in cryptocurrency after shifting their riches to tax havens like some nations in the Caribbean Basin and Southeast Asia.
He emphasised at the authority’s policy briefing before the strategy and finance committee at the National Assembly, the Korean parliament, that this new type of tax evasion is impeding both market justice and fair taxation.
Despite the fact that the NTS has not yet begun taxing gains from cryptocurrency trading, he stressed that these assets have been extensively utilized for money laundering. The representative cited other instances of such taxpayer conduct. In one of them, the proprietor of a hospital in Seoul owed income tax in the amount of 2.7 billion won ($2 million).
The resident of the Gangnam region of the Korean capital strongly denied having a job. The tax agency was able to prove that he had invested 3.9 billion won, or approximately $3 million, in cryptocurrencies. After the NTS seized his cryptocurrency account, he was forced to pay his debts to the government. Cryptocurrency is allegedly being used to avoid paying inheritance and gift taxes.
Officials from NTS acknowledged that the owners of internet marketplaces are a top target for the organisation. According to the claims, a growing number of them are looking to move their servers for online commerce abroad in order to avoid paying taxes, especially to tax havens.
Authorities in South Korea recently extended a 20 percent tax on earnings from cryptocurrency until 2025. The tax was set to go into effect on capital gains over 2.5 million won ($1,900) in January of the next year. Given that the tax was supposed to go into effect in January 2022, the government postponed its implementation once more.