According to the Reuters report, South Korea is looking to tighten a crackdown on tax evasion by cryptocurrency investors and high-income earners. The government is seeking fresh revenue to cover rising welfare costs, its finance ministry said on Monday. The government proposes revising tax codes so that tax authorities will be able to seize cryptocurrencies held by tax dodgers even if their cryptocurrencies are stored in digital wallets, starting next year.
Current regulations make it difficult for authorities to confiscate cryptocurrencies.
Current regulations make it difficult for authorities to confiscate cryptocurrencies held in digital wallets, although those accessible through exchanges can be seized to pay overdue taxes. Going after tax evaders is part of South Korea’s broader probe to tighten oversight of crypto markets to stop money laundering and other financial crimes using cryptocurrencies, as President Moon Jae-in looks to expand the tax base to fund increased welfare spending. South Korean government has been hiking taxes from big earners and conglomerates to ensure wealthy citizens share the burden of growing costs of an aging population, as it became the world’s fastest-aging society with the lowest birth rate anywhere in 2020.
South Korea seeks to revise a total of 16 tax codes.
The recent proposal is one pillar of the government’s once-a-year review of its tax system, which seeks to revise a total of 16 tax codes. The tax revisions will lead to a decline in tax revenue of at least 1.5 trillion won ($1.30 billion) between now and 2026. Tax breaks for research and development in semiconductors, batteries, and vaccine sectors more than offset any additional revenue expected from high-income earners, according to the ministry. The government also proposed expanding tax incentives to companies for hiring, especially outside the capital Seoul, and cut corporate income taxes for companies reshoring production capacities.