According to a report on August 22nd by local news agency Yongap, the local government of Cheongju City in South Korea has planned to seize digital assets from local tax evaders. The aim of this action is to monitor individuals holding virtual assets on centralized exchanges who have not paid taxes.
Prior to this, the city initiated an investigation into seven cryptocurrency exchanges, requesting specific information, including investment portfolios of 8,520 users who owe the government at least 1 million won (approximately 750 USD) in taxes.
Prominent exchanges like Upbit and Bithumb were mentioned in the report, as the city explained the need to investigate ownership rights of citizens and generate income for the government.
Over the past years, both Cheongju’s local government and South Korea in general have voiced concerns about using digital assets to conceal wealth and evade taxes. Authorities emphasized the necessity to control tax evasion behavior and hold citizens accountable.
For instance, last year, Cheongju City demanded detailed information from 16,000 digital asset investors while pursuing tax evasion allegations. The city warned 17 individuals and collected up to 68 million won (approximately 51,000 USD) in fines.
However, this situation hasn’t improved. In fact, some tax agencies have criticized digital asset investors for using their assets to avoid taxes, labeling their actions as “unpatriotic.” They claim that investors are using digital asset investments as a tax avoidance strategy.
Not only in South Korea, but also in other countries like Nigeria and Australia, recent regulations have expanded the tax network to include virtual assets, requiring clear tax declarations from digital asset investors. Governments have also redefined digital assets as personal property for taxation purposes. This move has been praised by digital asset operators as a step in the right direction, providing necessary legal support to the industry.
However, some cryptocurrency users argue that due to the nature of digital assets, they shouldn’t be taxed like other assets. They claim that such “harsh” taxation measures are deliberate attempts to undermine the industry.
Some users have even resorted to using privacy-focused coins like Monero to hide their transactions and identities, including transactions on decentralized exchanges (DEX). This trend has led governments to double down on efforts to curb cryptocurrency tax evasion.
In South Korea alone, the government has seized around 260 billion won (approximately 180 million USD) over the past years from cryptocurrency tax evaders, including recent cases involving the confiscation of 22 million USD from companies and CEOs.
The country amended its laws to allow the seizure of digital assets from non-taxpaying residents in 2021. Similar actions have been taken by countries like the United States and Argentina, which have seized over 1,000 wallets related to tax evaders.