South Korea’s tax authority is going after people who hide their assets in cryptocurrencies to avoid paying taxes.
March 15, 2021 | AtoZ Markets – The South Korean National Tax Service (NTS) is increasing its efforts to combat tax evasion and is now focusing on the use of cryptocurrencies for such illicit activities.
According to the Korea Herald, the tax agency has identified more than 2,400 tax evaders who used cryptocurrencies to hide assets worth more than 36.6 billion won ($32 million) from the government. The NTS said it was targeting people with more than 10 million won ($8,800) in tax defaults , while also recovering cash, bonds and other hidden assets.
In fact, the agency reportedly plans to conduct a deeper investigation of some of the people caught in the tax evasion scheme.
As part of its investigations, the NTS contacted crypto exchanges in the country to obtain detailed reports of client operations . Given the strictly regulated crypto space in South Korea, virtual currency trading is only possible through real-name accounts linked to banks and other financial institutions.
In fact, exchanges in the country could soon begin to face stiff penalties for breaching customer identification laws . Major platforms like Bithumb are already improving their anti-money laundering protocols.
The agency’s focus on tax evasion through cryptocurrencies comes amid reports of a surge in cryptocurrency trading activity from South Korea. Notably, market activity on the country’s major exchanges briefly topped South Korean stock market figures on Sunday.
According to the NTS, the number of cryptocurrency investors in South Korea increased by more than 300% in the last 12 months. This increase has also increased eightfold in the country’s virtual currency trading volume.
The volume registered in the main cryptocurrency exchanges of South Korea exceeds that of the country’s stock market
For the regulator, the investigation of people who use cryptocurrencies to evade taxes is part of its campaign of “antisocial tax evasion.”
Meanwhile, the government’s planned 20% capital gains tax on cryptocurrency trading earnings exceeding $2,300 will take effect on January 1, 2022.
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