In a seismic effort to address the issue of tax evasion, Gyeonggi, a province in South Korea has adopted an advanced system that uncovers people avoiding taxes by sheltering their wealth in cryptocurrency. So far this approach is highly innovative and has seen authorities recover $4.6m in unpaid taxes from one group of offenders.
The old method of finding and grabbing crypto from tax cheats was long. It often took half a year per case. But, a new gadget-like management system made the process a lot quicker, taking just 15 days, local news says.
Tracking down evaders
So basically, the administrators enter a roster of defaulters into the program that will then use national Identification Numbers to trace phone numbers connected with them during participation in digital currency markets. This helps find people registered in digital trade platforms a lot better.
Because of this improved monitoring system, 5,910 virtual asset owners like Bitcoin have been tracked who owe a total tax debt of $3.5m. Under an improved procedure that enables for streamlined operation within one single year alone, $4.6m was successfully collected as late levies from over 2,300 such taxpayers.
The Provincial Tax Justice Department has said that they will keep looking for dishonest tax evaders who deal with virtual coins and say that they have no money to pay taxes. Noh Seung-ho, head of the Provincial Tax Justice Department said, “We will continue to aggressively pursue dishonest delinquents who claim they have no money to pay taxes while dealing in virtual assets.”
Related developments in South Korea
The province takes administrative measures against those unwilling to provide data and also enhances cooperation with crypto exchanges. People’s Power Party (PPP) in South Korea wants to delay crypto gains tax for two years. The proposal is reportedly a potential campaign pledge ahead of the April 2022 general election.
At the same time, South Korea’s Financial Intelligence Unit (FIU) pushes crypto exchanges to flag dodgy transactions. They want to stop money laundering and illegal “cash outflows.” The agency also aims to start a “virtual asset analyser.” It will trace and study digital asset transactions and their “maze-like routes.”
In early February, the South Korean government updated the rules for using virtual assets. If someone breaks the law, they could go to jail for more than a year or have to pay a big fine. For serious violations, like making a lot of money illegally from cryptocurrency trading, the punishment could be even tougher, with criminals facing life in prison if they make over 5 billion won ($3.8 million) from illegal schemes.
