South Korea’s tax authority is going after individuals hiding their assets in cryptocurrencies as a way of avoiding tax payments.
The National Tax Service of South Korea is increasing its efforts to combat tax evasion and is now focusing on the use of cryptocurrencies for such illicit activities.
According to The Korea Herald, the tax agency has identified more than 2,400 tax evaders who used cryptocurrencies to hide assets worth over 36.6 billion won ($32 million) from the government.
The NTS said it targeted individuals with more than 10 million won ($8,800) in tax defaults while also recovering cash, bonds, and other hidden assets.
Indeed, the agency reportedly plans to conduct a deeper probe of some of the individuals caught in the tax evasion scheme.
As part of its investigations, the NTS liaised with crypto exchanges in the country to obtain detailed customer trading reports. Given the tightly regulated crypto space in South Korea, virtual currency trading is only possible via real-name accounts tied to banks and other financial institutions.
Indeed, exchanges in the country may soon begin to face stiff penalties for non-compliance with customer identification laws. Major platforms like Bithumb are already upscaling their Anti-Money Laundering protocols.
The agency’s focus on tax evasion via cryptocurrencies comes amid reports of a surge in South Korea’s crypto trading activity. As previously reported by Cointelegraph, market activity on the country’s major exchanges briefly exceeded the figures from the South Korean stock market on Sunday.
According to the NTS, the number of crypto investors in South Korea increased by more than 300% in the last 12 months. This rise has also resulted in an eightfold increase in the country’s virtual currency trading volume.
For the NTS, the investigation into individuals using cryptocurrencies to evade taxes is part of its “anti-social tax dodging” crackdown.
Meanwhile, the government’s planned 20% capital gains tax on cryptocurrency trading profits exceeding $2,300 will come into effect on Jan. 1, 2022.