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South Korea will confiscate cryptoassets for tax evasion

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.

According to Reuters, citing a statement from the South Korean Ministry of Finance, the government is proposing 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 South Korean authorities to strengthen oversight of cryptocurrency markets to root out money laundering and other financial crimes involving cryptocurrencies.

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 2020, South Korea became the fastest aging society in the world with the lowest fertility rate.

The government 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.

“While the $ 1.3 billion is not tax-neutral, it is not a huge amount and needs to be donated as part of the revision of tax codes,” Finance Minister Hong Nam-ki told a news conference.

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.

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