South Korea’s tax administration pledged to take tough measures against tax evasion via virtual assets and platforms. Although the Korean government has yet to tax capital gains from crypto trading and investment, Seoul authorities claim that cryptocurrencies have been used to launder money.
According to the Korea Herald, the South Korean National Tax Service ( NT) intends to take serious actions against tax evasion techniques that rely on virtual assets such as cryptocurrencies and platforms operating with them.
According to the official, a growing number of Koreans are looking to avoid taxes by investing in crypto assets and then moving their wealth to tax havens such as the Caribbean Basin or Southeast Asia.
The official explained that new tax evasion was a problem for justice on the market and fairness in taxation during the policy briefing of the authority before the strategy committee at the National Assembly.
He stressed that although the NTS has yet to tax gains from trading cryptocurrencies, the assets have been used for money laundering. There have been several cases in which tax payers engaged in such behaviour, according to the official. One case involved a Seoul hospital owner who owed $2.7 billion in income tax.
The man was living in Seoul’s Gangnam area and claimed he wasn’t earning any money. The tax service however was able to prove that he had invested 3.9 billion won (almost 3 million dollars) in cryptocurrency. After the NTS took his crypto account, he was forced to comply with his state obligations. It is also alleged that crypto was used to avoid gift and inheritance taxes.
Officials from NTS also stated that online platform operators are a prime target. According to the claim, they are trying to move their servers to electronic commerce overseas to avoid taxes, including tax havens.
South Korean authorities have delayed a 20% tax on crypto-related profits until 2025. For capital gains above 2.5 million won ($1,900), the levy was to be in force in January 2019. The government delayed imposing the tax a second-time, as originally planned.