Tax authorities in South Korea have announced they are to step up efforts to identify tax evasion through digital currency, as well as looking into those using digital currencies for illegal activities.
According to local media reports, the National Tax Service has identified some 2,400 suspected tax evaders relying on digital currencies to hide their assets, thought to amount to over KRW36.6 billion (US$32 million).
The authorities are now targeting individuals with more than $8,800, or KRW10 million, in tax defaults, in a bid to recover cash, digital currency and other assets. Individuals caught by the investigations may also be subject to more wide-ranging probes into their affairs, according to the tax agency.
The NTS has been working alongside cryptocurrency exchanges in obtaining detailed trading information from different accounts. Due to regulation in South Korea, only real-name digital currency trading accounts are permitted, thus the tax authorities have been able to specifically target individuals flagged for suspicious behavior through their analysis of trading data.
It comes amid a wider crackdown on digital currency regulation across South Korea, with new rules set to come into force that could impose much heavier penalties on exchanges for non-compliance.
As a result, leading Korean exchanges such as Bithumb have already stepped up their internal anti-money laundering protocols, in anticipation of the new rules.
The focus on tax evasion and illegal behavior with digital currencies comes amid surging trading volumes in Korea, with digital currency trading activity even surpassing stock market trading volumes, albeit briefly, earlier this week.
Tax authority figures show a 300% increase in the number of digital currency investors over the past twelve months, as well as an 8x increase in total trading volumes over the period.
It comes as the government in South Korea awaits the introduction of new tax measures for digital currency transactions, which could levy a 20% tax on trading profits over a $2,300 annual threshold.
See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
