Key Takeaways
- Gyeonggi Province in South Korea has successfully collected $4.6 million in non-declared taxes from crypto holders by implementing a digital tracking system.
- The innovative system reduces the time needed to trace individuals' digital asset exchange accounts from six months to approximately 15 days.
- This effort is part of a larger regulatory push in South Korea, including stricter crypto exchange cooperation and the introduction of severe penalties for cryptocurrency-related violations.
The Gyeonggi Provincial Tax Department effectively harnessed a new digital tracking system to collect non-declared taxes.
This initiative targets tax evaders with crypto accounts and has already enabled the collection of approximately 6.2 billion won ($4.6 million) in taxes from 2,390 individuals.
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A detailed report by Yonhap News Agency on February 22 revealed that the province's tax authorities used resident registration information to link tax evaders' mobile phone numbers with their crypto exchange accounts.
This method marks a significant leap from the lengthy process of requesting data from crypto exchanges, which could extend up to six months. The new digital system shortens this procedure to just about 15 days.
Noh Seung-ho, head of the Tax Justice Department, assured:
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.
Looking forward, Gyeonggi Province aims to enhance collaboration with crypto exchanges and consider administrative actions against non-cooperative platforms.
In parallel, the Financial Intelligence Unit (FIU) of South Korea is bolstering efforts to curb money laundering and illegal "foreign exchange outflows" through crypto transactions by deploying a "virtual asset analysis system".
In addition, South Korea has recently introduced severe penalties for breaches within the crypto space, including imprisonment, hefty fines, or even life sentences for offenders making over 5 billion won ($3.8 million) from illegal activities.
This initiative showcases the potential of technology in enforcing tax laws and aligns with broader regulatory measures to safeguard financial transactions and combat illegal activities in the digital asset space.
