The city of Gwacheon in South Korea is working on a system that would confiscate assets that belong to crypto investors who fail to meet their tax obligations. According to local news outlet Energy Kyungjae, the launch of this “electronic virtual asset seizing system” is scheduled for a few months.
High-Income Earners Evade Crypto Tax in South Korea
With this IT solution, regulators in the region hope to identify the crypto wallets of residents evading tax. 361 high-income citizens have been identified as tax evaders, owing as much as 3 million won.
These entities are the first target of the seizing system, mainly because regulators in Gwacheon City believe they are intentionally concealing their wealth in digital assets to avoid remitting the accrued tax.
Meanwhile, regulators have promised to warn anyone who falls into this category, asking them to fulfill their tax payments. Failure to adhere to this warning before a stipulated deadline will eventually lead to a seizure of digital assets. This comes when South Korea is trying to implement tighter oversight on cross-border cryptocurrency transactions to prevent tax evasion and other financial crimes.
Push for Fairness With Crypto Wallet Seizing System
By the first half of this year, Gwacheon City officials will kickstart the process of collecting additional tax.
The new crypto wallet seizing system will be utilized for this exercise. Kang Min-ah, Gwacheon City’s Tax Division Chief, insisted that the latest development is necessary to ensure the tax system is fair for all citizens who pay their taxes dutifully.
“We will realize fair taxation through strong responses to tax avoiders and actively block tax evasion through the seizure of virtual assets,” Kang stated.
South Korea Postpones Implementation of Crypto Tax
In South Korea, the crypto tax proposal has generally not become as effective as planned. Just towards the end of 2024, the South Korea Democratic Party (KDP) agreed that introducing a crypto gains tax would be postponed by another two years.
Therefore, the controversial tax will take effect in 2027 instead of January 2025. Explicitly, this is the third time the country has pushed back the implementation of its digital asset capital gains tax.
There are intense debates on the timing and impact of the proposal.
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