Starting in 2022, digital currency holders in South Korea who avoid taxes may have their assets taken by the authorities. Authorities will seize assets even if they are housed in private digital wallets under a new proposed law. In addition, starting in 2022, South Korea would impose a 20% tax on digital currency profits.
With the lowest birth rate globally in 2020, the Asian country is currently the fastest aging nation. As a result, the South Korean government has increased taxes on the wealthiest and cracked down on money laundering to help share the burden of caring for its aging population.
According to a Reuters story, the focus is now shifting to tax evaders in the digital currency industry. Currently, the government is unable to seize digital money from individual wallets. However, if they are held on digital currency exchange, it can take them and use them to pay any unpaid taxes.
According to a Finance Ministry official, the new guidelines will allow instant seizure without a court-approved change in ownership documents. In addition, tax evaders’ assets kept in the form of digital currency will no longer be immune to seizure and forfeiture.
As part of its war on tax evaders, the South Korean government has already demonstrated its capacity to capture digital currency this year. The Seoul municipal administration confiscated $22 million from 600 tax evaders in April. It followed up two months later with the seizure of more than twice as much money—up to $47 million—from 12,000 persons it accused of tax evasion.
The proposed modifications follow a slew of other harsh measures taken by the South Korean government, all aimed at increasing tax revenue from the digital currency business.
The most significant and contentious is the 20% tax on digital currency revenues. Despite the protests of many in the country’s digital currency business, this legislation is expected to take effect in January 2022. However, to establish a more comprehensive infrastructure around digital currencies, lawmaker Noh Woong-rae has recommended postponing the tax for at least another year. Korea’s parliament, on the other hand, has yet to act on the idea.