South Korean Province Cracks Down on Tax Evaders Through Crypto Accounts

The province's digital management system has reduced the data exchange time between tax services and cryptocurrency platforms to approximately 15 days.

South Korean province uses digital system to monitor crypto tax evasion.

South Korea’s Gyeonggi Provincial Tax Justice Department has successfully collected 6.2 billion won ($4.6 million) in non-declared taxes in 2023, thanks to a newly implemented digital tracking system that targets crypto accounts. 📈

Catching Delinquents with Mobile Numbers

According to a report by Yonhap News Agency on February 22, the tax department utilized the resident registration data of tax evaders, known as “delinquents”, and traced their mobile phone numbers to identify their accounts on digital asset exchanges. This innovative approach allowed authorities to quickly locate and target individuals attempting to evade taxes by hiding behind cryptocurrencies. 🕵️‍♂️

The traditional method of requesting information from crypto exchanges on a case-by-case basis was time-consuming, taking up to six months for communication and document exchange. However, the Gyeonggi tax department’s new digital management system has reduced the process to a speedy 15 days, revolutionizing the way tax authorities tackle crypto tax evasion. 💡

A Rundown of Results

Through the implementation of this digital tracking system, the provincial tax department detected the crypto accounts of 5,910 individuals, each of whom owed more than 3 million won ($2,200) in local taxes. Taking strong action against tax delinquents, the department collected a total of 6.2 billion won ($4.6 million) from 2,390 offenders. 💸💰

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Strengthening Cooperation and Administrative Measures

Looking ahead, the Gyeonggi Province plans to enhance cooperation with virtual asset exchanges, encouraging them to provide necessary information promptly. Additionally, they will review administrative measures for platforms that refuse to cooperate. Noh Seung-ho, head of the Provincial Tax Justice Department, emphasized their commitment to cracking down on dishonest delinquents, stating:

“We will continue to take strong collection action against unscrupulous delinquents, such as those who say they have no money to pay taxes and trade virtual assets.”

Cooperation between tax authorities and virtual asset exchanges is crucial to ensure a robust and fair tax collection system. By working together, they can effectively monitor and deter tax evasion attempts in the crypto space. 🤝

South Korea’s Anti-Money Laundering Efforts

In light of increasing concerns about money laundering and illegal foreign exchange outflows, South Korea’s Financial Intelligence Unit (FIU) has been actively encouraging crypto exchanges to report any suspicious transactions. The agency is also preparing to launch a “virtual asset analysis system,” which will track and analyze virtual asset transaction details and detect complex movement paths. These measures are aimed at ensuring transparency and preventing illicit activities in the cryptocurrency ecosystem. 🔒💼

New Legislation to Safeguard Crypto Ecosystem

To further reinforce the integrity of the crypto ecosystem, South Korea’s government recently updated the Virtual Asset Users Protection Act in early February. The new legislation imposes significant criminal punishments and hefty fines for violations. Offenders can face imprisonment of over one year or fines ranging from three to five times the amount of illegal profits. The most severe penalties are reserved for criminals conducting illegal crypto trading schemes that generate over 5 billion won ($3.8 million), who may face life sentences. ⚖️🔒

Q&A

Q: How did the Gyeonggi Provincial Tax Justice Department identify tax evaders?

A: The tax department utilized the resident registration data of tax evaders, known as “delinquents,” and traced their mobile phone numbers to identify their crypto accounts on digital asset exchanges. This innovative technique allowed authorities to detect and target tax evaders who attempted to hide their funds through cryptocurrencies.

Q: How much money did the tax department collect from tax evaders?

A: The Gyeonggi Provincial Tax Justice Department successfully collected a total of 6.2 billion won ($4.6 million) in non-declared taxes from 2,390 offenders. Each of these individuals owed more than 3 million won ($2,200) in local taxes.

Q: What penalties do individuals face for violating the Virtual Asset Users Protection Act in South Korea?

A: Individuals who violate the Virtual Asset Users Protection Act may face imprisonment of over one year or fines ranging from three to five times the amount of illegal profits. For criminals conducting illegal crypto trading schemes that generate over 5 billion won ($3.8 million), life sentences may be imposed.

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With increasing efforts by tax authorities and financial institutions to regulate the crypto space, it is clear that the era of tax evasion and illicit activities hiding behind cryptocurrencies is drawing to a close. As virtual assets become more integrated into mainstream society, it is essential to maintain a robust framework that ensures transparency, lawfulness, and fair taxation. By working together, we can create an environment where both individuals and businesses can enjoy the benefits of cryptocurrencies while abiding by the necessary legal obligations. 💪💻

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References:

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