On March 15, South Korea’s tax watchdogs announced they had caught over 2,400 culprits who had used crypto to hide their assets to avoid getting taxed. According to data collected by the National Tax Service, 2,416 tax evaders had accumulated $32M in cryptocurrencies, including BTC and ETH. The crackdown picked out individuals that had made profits over $10M while evading tax, and the NTS recovered all the hidden assets in cash and bonds.
South Korea became a digital asset hotspot after passing laws to allow virtual currencies back in March. According to NTS, the number of cryptocurrency investors over the year has increased by almost a million. Earlier this year, the country’s financial authorities revealed their plans to impose a 20% tax on cryptocurrency profits collected annually as of 2022. The tax will apply to earnings above the $2,260 mark.
South Korea’s Crypto Market
Virtual currencies have somewhat been something of a red zone for South Korea. A few years ago, South Korea’s government tried hard to suppress crypto enthusiasts’ demand to include virtual currencies into the financial market. Before the country’s government passed the law that allowed crypto trading, tax agencies and local police were frequently raiding crypto exchanges to investigate allegations of tax fraud.
Nevertheless, the country’s economic hardships and lack of opportunities have driven several residents to lean on digital currencies. Additionally, the technology and innovative aspects of South Korea have made many young citizens prefer using cryptocurrencies to fiat money. However, the NTS claims that using cryptocurrency opened doors for fraudsters and tax evasion since one can easily hide their assets in virtual currencies since they are tax-free to date.
According to the South Korean government, the proposed law to tax cryptocurrency profits above $2.2K by the Ministry of Finance will help with tax fraud investigations. In an interview with the local newspaper, the Korea Herald, one government official said they would find a way to regulate all digital currencies.
The official said, “Unlike stocks, virtual assets are not considered financial assets in international accounting standards, and financial investment income, such as stock investment,”
A Tough Space for Several Countries
While countries like South Korea are embracing cryptocurrency, other governments are fighting against using crypto. Earlier this year, the Central Bank of Nigeria prohibited cryptocurrency and payments from crypto exchanges within the Nigerian borders. The probe saw many accounts holding virtual currencies get closed down with no way to recover the assets.
The CBN gave the reasons for the action a few days later in a press release. India’s government is also planning to cripple cryptocurrency mining and trading activities after proposing a law that will halt cryptocurrency’s use in the country.