The Tax Service promises to take tough measures after Koreans Use cryptocurrency to evade taxes
The South Korean Tax Administration has pledged to take strict measures against tax evasion using virtual assets and platforms.
Although the Korean government has not yet begun to tax capital gains as a result of investments and trading in cryptocurrencies, Seoul authorities claim that cryptocurrencies are actively used for money laundering.
Korean Citizens Are Accused of Investing In Crypto Assets to Evade Taxes
The National Tax Service (NTS) of South Korea intends to take tough measures against the practice of tax evasion using virtual assets, such as cryptocurrencies, and platforms working with them, the Korea Herald reported to its readers, citing a representative of the department.
An increasing number of Koreans are reportedly seeking to evade taxes by investing in crypto assets after moving their fortunes to tax havens such as some Caribbean and Southeast Asian countries, an official said on Monday.
During the political briefing of the authorities before the Strategy and Finance Committee of the National Assembly, the Korean Parliament, the official explained that this new type of tax evasion hinders justice in the market, as well as fairness in taxation.
He stressed that although the NTS has yet to introduce taxation of income from trading cryptocurrencies, these assets are actively used for money laundering. The official cited various cases of similar behavior of taxpayers. In one of them, the owner of a hospital in Seoul owed 2.7 billion won ($2 million) in income tax.
The man, who lives in the Gangnam district of the Korean capital, insisted that he earns nothing. However, the tax service managed to establish that he invested 3.9 billion won (almost $ 3 million) in cryptocurrency. He was forced to fulfill his obligations to the state after the NTS arrested his crypto account. The cryptocurrency was also allegedly used to evade inheritance and gift taxes.
Representatives of the NTS also recognized that the operators of online platforms are the main goal of the agency. It is claimed that an increasing number of them are seeking to move their e-commerce servers abroad to avoid taxation, including in tax havens.
South Korean authorities have recently postponed the introduction of a 20 percent tax on cryptocurrency-related profits until 2025. The tax was supposed to take effect next January for capital gains exceeding 2.5 million won ($1,900). The government is delaying the introduction of the tax for the second time, since the original plan was to introduce it in January 2022.
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