The South Korean tax agency has issued a stern warning to crypto holders: pay your taxes or risk losing your cold wallets. This move by the National Tax Service (NTS) highlights the tension between tax authorities and crypto tax evaders who use hardware wallets.
South Korean Crypto Tax Crackdown
The NTS has already been actively pursuing tax evaders who use domestic crypto exchanges. Recent crackdowns have expanded to include individuals failing to pay even bills like water charges and traffic fines. But the agency’s latest announcement underscores a significant shift in focus towards those holding cryptocurrencies offline.
“We can now monitor a non-compliant taxpayer’s crypto transaction history using blockchain protocol tracking programs. If we suspect they are hiding their coins offline, we can conduct searches at their homes, confiscating hard drives or PCs.”
A spokesperson from the NTS stated
This aggressive stance is part of a broader strategy to clamp down on crypto-related tax evasion. According to NTS data, over the past four years, the agency has seized and collected virtual assets from 14,140 delinquent taxpayers, liquidating 146.1 billion won ($103 million) worth of crypto.
Challenges in Enforcing South Korean Crypto Tax Laws
Despite these efforts, the NTS faces significant hurdles. One major issue is the use of overseas crypto exchanges by South Korean traders. Domestic law does not extend beyond national borders, leaving the NTS reliant on international cooperation to track assets held abroad.
The Multilateral Tax Administration Cooperation Agreement allows South Korea to collaborate with 74 nations on tax matters. However, key countries like the United States, China, and Russia are not part of this agreement, complicating enforcement.
Data from the Financial Supervisory Service (FSS) reveals that in the first half of this year alone, 78.9 trillion won ($55.6 billion) worth of crypto was transferred from domestic exchanges to foreign entities or individual wallets. This trend indicates a growing preference among South Korean traders for foreign or decentralised platforms.
*Disclaimer: This article does not constitute financial advice. Please consult a financial advisor for personalised guidance.*
