South Korea is cracking down on those using cryptocurrencies to evade taxes as the country prepares to implement a new 20% tax on crypto gains. This move by the National Tax Service (NTS) underscores the government’s commitment to regulating the digital asset space while ensuring tax compliance.
The NTS has been monitoring the crypto holdings and activities of major tax debtors to uncover illegal practices. In one investigation, the agency found that an individual who purchased 20 different cryptocurrencies with funds from a property sale attempted to hide these assets by transferring them to multiple wallets. The NTS tracked these transactions and traced them to the individual’s mother and cousin, leading to a lawsuit to invalidate the transfers.
South Korea’s Evolving Crypto Tax Framework
Meanwhile, South Korea’s Democratic Party has proposed a 20% tax on crypto gains exceeding 50 million Korean won ($35,919), with an additional 2% local tax. Initially proposed in 2021 under former President Moon Jae-in, this taxation plan faced investor objections and has since been delayed. Now, the country has reintroduced the proposal, revising the scheme and significantly increasing the crypto gain threshold from 2.5 million won ($1,791) to 50 million won.
Read also: South Korean City Seizes and Sells Crypto for Unpaid Taxes
This updated framework shields most retail investors from the new tax. Additionally, taxpayers can claim up to 50% of the sale price as the acquisition cost if their records are incomplete. These updates aim to alleviate market concerns and bolster investor confidence.
These recent moves align with South Korea’s vision of expanding its crypto industry while ensuring investor support. Over the past few months, the country has introduced initiatives to foster crypto growth and address industry threats.
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