By
Temitope Olatunji
June 17th, 2024
South Korea’s Jeonbuk Province has seized 190 million won worth of cryptocurrency, which is about $138,000, from 31 individuals who failed to pay their local taxes.
On June 18th, the South Korean province announced that it had detected the crypto holdings of tax evaders after going through the records of five South Korean cryptocurrency exchanges – Upbit, Bithumb, Coinone, Korbit, and Gopax. From March to April, tax authorities searched the data of 3,026 individuals who owed over 5 million won, which is about $3,619 in local taxes, and were able to match 31 of them to crypto wallets on four of the exchanges, excluding Gopax.
Under South Korean law, all cryptocurrency exchanges operating in the country must link customers’ wallets to their real names and social security number-verified bank accounts. This allowed the province’s tax officials to easily identify the delinquent taxpayers who were holding crypto assets.
The seized cryptocurrency is six times more than the amount confiscated in a similar crackdown last year, when Jeonbuk Province seized around $22,500 worth of crypto from 12 individuals owing more than $3,619 in local taxes. According to Hwang Cheol-ho, the head of the Jeonbuk Self-Governing Province Autonomous Administrative Unit, the authority is getting more familiar with the tricks tax evaders use to hide their digital assets, and they will keep collecting funds in this manner. He said:
‘The seizure amount of virtual assets has increased more than sixfold compared to last year, and the trend of concealing assets has become clearer…We will track and collect taxes to the end in terms of fairness and diligence.”
The province gave the 31 tax evaders an ultimatum and instructed them to pay their outstanding tax bills or they get their assets liquidated and confiscated. Following this warning, one individual opted to immediately pay their $1,839 tax bill rather than risk losing their crypto assets.
South Korea’s Broader Efforts to Combat Crypto-Enabled Tax Evasion
This crackdown is part of the effort by South Korean authorities to combat cryptocurrency tax evasion. In March, the tax authorities in Hwaseong were able to seize the crypto assets of a tax offender worth over $768,500, with $567,000 of the total seized from one single person. Also, in February, the Gyeonggi province revealed that it had gotten $4.6 million in outstanding taxes from crypto holdings using an electronic system that can track virtual assets.
These measures are expected to reduce tax offenses through crypto, and they could also reduce the rate at which users conceal their crypto earnings in the country. The government had earlier warned crypto holders to declare their overseas assets or face prosecution. According to the Income Tax Act, residents with more than 500 million won in their overseas accounts at the end of any month must declare it to the authority by June 30 every year.
