The South Korean authorities are considering revising the country’s tax laws to allow financial officials to confiscate cryptocurrency assets kept by the tax evaders.
Regulations now make it almost impossible to obtain digital currency assets to be kept in personal wallets. This is especially true for assets held offline in cold crypto wallets. Others are available through certain hot wallets, like those commonly found on different trading platforms, which might have already been confiscated to pay back outstanding taxes.
Increasing welfare expenses
South Korea is among the world’s fastest-aging communities, with the lowest population growth rate. To cover the rising costs of an elderly population, the state has already raised taxes upon high-income individuals and companies. The ministry of finance stated that it sees digital currency as a further source of income to meet these growing welfare expenses.
Furthermore, from broadening the tax base to support higher welfare expenditure, the President of South Korea Moon is targeting tax dodgers in part of S. Korea’s larger investigation into digital currency marketplaces.
Taxes on cryptocurrency
Korean police have confiscated over $50m in digital currencies from roughly 12k people suspected of evading taxes in the prior month of June. An inquiry resulted in the biggest seizure of unpaid taxes for digital currency in the nation’s history. The investigation, which lasted many months, concentrated on dealers who concealed cash to prevent having to pay taxes. The confiscation came after a more extensive investigation into overdue taxes of almost 150k citizens. Finally, this was the final culmination of South Korean officials’ efforts to crack down upon digital currency markets.
Korean authorities said earlier in 2021 that they would tax digital currency transactions starting from 2022 at a rate of 20 percent. Earnings from digital currency trades would now be classified as assorted income and will be liable to the increased tax rate, according to the latest laws.
From May 2023, traders must declare digital currency asset profits while paying their personal taxes. Several investors argue that digital currency is now being targeted out because the increased rates may not be extended to stock exchanges. Although digital currency investors are understandably annoyed, a recent survey found that S. Koreans, on average, favor the proposed tax.