The Gyeonggi Provincial Tax Justice Department, located in the most densely populated province of South Korea, has successfully recovered 6.2 billion won ($4.6 million) in undeclared taxes for the year 2023. This achievement was made possible through the implementation of a digital tracking system specifically designed to target tax evaders with crypto accounts.
According to a report by Yonhap News Agency on February 22, the Gyeonggi tax department utilized the resident registration data of individuals categorized as “delinquents” and traced their mobile phone numbers to identify their accounts on digital asset exchanges. This innovative approach enabled the tax department to streamline the process of gathering information from crypto exchanges, which previously required individual requests and could take up to six months. With the newly developed digital management system, this process was reduced to just 15 days.
As a result of utilizing this system, the provincial tax department was able to identify 5,910 individuals who had crypto accounts and owed more than 3 million won ($2,200) in local taxes. From these offenders, the department successfully collected 6.2 billion won ($4.6 million) in unpaid taxes from 2,390 individuals.
Moving forward, the province intends to further enhance cooperation with virtual asset exchanges and will be reviewing administrative measures for platforms that refuse to cooperate. Noh Seung-ho, the head of the Provincial Tax Justice Department, emphasized the department’s commitment to ensuring tax compliance and stated that they will not tolerate tax evasion.
In addition to the efforts made by the Gyeonggi tax department, South Korea’s Financial Intelligence Unit (FIU) has actively encouraged crypto exchanges to report any suspicious transactions related to money laundering or illegal foreign exchange activities. The agency is also planning to launch a virtual asset analysis system that will track and analyze the details of virtual asset transactions, including their complex movement paths.
To further combat illegal activities in the crypto space, the South Korean government recently updated the Virtual Asset Users Protection Act in early February. This legislation introduces severe criminal punishments and hefty fines for violations, including imprisonment for more than one year or fines ranging from three to five times the amount of illegal profits. Individuals who make more than 5 billion won ($3.8 million) from illegal crypto trading schemes may even face life sentences.
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