South Korea to seize digital currencies from tax dodgers in proposed law

Getting your Trinity Audio player ready...

Digital currency holders in South Korea who evade taxes could have their assets seized by the authorities starting 2022. A new proposed law gives authorities the power to seize the assets even if they are stored in private digital wallets. South Korea is also set to levy a 20% tax on digital currency profits starting 2022.

The Asian country is now the world’s fastest-aging nation, with the lowest birth rate in 2020 globally. To help share the burden of taking care of its aging population, the South Korean government has been hiking taxes for the wealthy and cracking down on money laundering.

The focus is turning to the tax evaders in the digital currency industry now, a report by Reuters noted. As it stands, the government can’t seize digital currencies from wallets owned by individuals. It can, however, seize them if they are stored on a digital currency exchange and use them to pay any overdue taxes.

According to an official at the Finance Ministry, the new rules will allow “direct seizing without court-approved change in ownership records. Assets held by tax dodgers in the form of digital coins will no longer evade seizure and forfeiture.”

This year, the South Korean government has already showcased its ability to seize digital currencies as part of its crackdown on tax delinquents. In April, the local government in Seoul seized $22 million from 600 tax dodgers. It followed it up two months later by seizing more than twice as much money—as much as $47 million—from 12,000 people it accused of evading taxes.

The latest proposed amendments accompany some other drastic measures the South Korean government has been taking, all geared towards increasing the tax collected from the digital currency industry.

The most impact and controversial one is the 20% tax on digital currency profits. This rule is set to take effect in January 2022, despite outcry from many in the country’s digital currency industry. Lawmaker Noh Woong-rae recently proposed deferring this tax for at least one more year in order to build a more comprehensive infrastructure around digital currencies. However, Korea’s parliament has yet to move forward on the proposal.

Watch: CoinGeek Zurich panel, The Future of Trading & Digital Assets