South Korean legislators propose to revise tax codes so that tax authorities would be able to confiscate tax evaders’ crypto assets directly from their digital wallets.
According to a report published on July 26, the proposal forms part of a wider, annual review of the country’s tax system. This year, faced with rising welfare costs to help sustain the increasingly elderly population, legislators are looking to amend a total of 16 existing tax codes.
These revisions include redistributive measures to charge higher taxes on wealthy individuals and conglomerates, in addition to cracking down on money laundering and tax evasion in sectors like the digital assets industry.
While South Korean authorities can already seize crypto assets accessible through centralized exchanges, the revisions would significantly expand their powers by extending this to individuals’ personal wallets.
Overall, the report notes that the package of revisions will result in a slight decline of $1.3 billion in tax revenue for the government, due to its proposals for specific tax breaks to spur research and development in semiconductors, batteries and vaccines. Tax incentives could also be implemented for firms looking to hire labor outside of the capital, Seoul, as well as those looking to reshore their production capacities.
The finance ministry will reportedly submit all proposals to parliament by Sept. 3, as lawmakers still need to approve the measures. As previously reported, Korea is poised to implement a 20% tax on Bitcoin (BTC) and crypto profits starting Jan. 1, 2022 — a move that has faced significant pushback from the industry. The new regime will charge a 20% tax on all crypto trading capital gains over $2,300.
In April, Seoul’s tax authorities seized $22 million in crypto from individuals and company executives who owed outstanding taxes.