South Korea will tighten measures to combat tax evasion by cryptocurrency investors and high-net-worth individuals. The money will go to cover rising welfare costs.
The government proposes to revise the Tax Code. Tax authorities will be able to confiscate cryptoassets belonging to tax-evading cryptocurrency investors and stored in personal cryptocurrency wallets starting next year.
Current regulations make it difficult for authorities to confiscate cryptoassets held in personal cryptocurrency wallets. Now the authorities can only achieve the confiscation of cryptoassets from accounts on cryptocurrency exchanges in order to pay overdue taxes. The pursuit of tax evaders is part of a broader plan by the authorities of South Korea to strengthen oversight of cryptocurrency markets. As well as root out money laundering and other financial crimes involving cryptocurrencies.
South Korea raises taxes
In general, the government has embarked on a policy of raising taxes on large incomes and on conglomerates. So that wealthy citizens bear the burden of the growing costs of an aging population.
In May, South Korean authorities approved a plan to introduce a 20 percent tax on cryptocurrency trading profits. This will affect citizens who earned more than 2.5 million won ($ 2 thousand) a year with the help of digital money. Income below this amount not taxed.
So, if for the year you made a profit of up to 2.5 million won, which corresponds to $ 2,200, then you do not need to pay anything to the tax office. But as soon as you slightly exceed the specified bar, the law comes into play. Providing for a 20% payment to the state. It should be understood that such measures already exist in a number of countries. So they do not cause any surprise. Unfortunately, the sources don’t indicate how the profit calculated. And whether they only concern the receipt of real money on a plastic card. Or a more complex calculation mechanism is provided there.
Be that as it may, South Korean lawmakers have prepared a big surprise for the citizens. So, if you withdrew 2300 dollars, but due to your natural forgetfulness did not inform the authorities about it, then the cryptocurrency will simply be confiscated from you.
The new rules will come into force on October 1, 2021. In the country, cryptocurrencies are included in the “other income” category.
Changes in legislation
The government of South Korea plans to revise 16 tax codes. According to the Treasury Department, the changes will result in at least $ 1.3 billion in tax revenues from now until 2026. Due to increased tax incentives for research and development in semiconductors, batteries and vaccines.
The ministry will submit to the country’s parliament amendments to tax legislation by September. South Korea recently obliged foreign exchanges to register with the regulator. And last month the country’s government banned banks from servicing exchanges without following KYC and AML rules.
Note also that the South Korean authorities are actively testing the digital won. So far, the stage has not even approached the success of the Chinese regulator, but the transition to digital money is inevitable.
In August, the Bank of Korea will launch a new phase of testing the digital won, which will run until December this year. Test participants will have access to payments, money transfers and deposits on mobile devices using the national digital currency.