A local report revealed the provincial tax department’s implementation of a new digital tracking system in one of South Korea’s most important provinces. As the first of its kind in the country, the new system reduces the process’ time and facilitates the tracking of crypto assets held by debtors in virtual asset exchanges.
$4.6M Seized With Help Of New Digital Tracking System
On February 22, a Yonhap News Agency report revealed the implementation of a new system by the Gyeonggi Provincial Tax Justice Department. The digital tracking system allows the provincial tax authorities to track crypto exchange accounts held by tax evaders “more easily.”
Gyeonggi is the most populous province in South Korea, with a population of over 13 million people. The Gyeonggi-do area has historically been politically important in the country and forms part of the Gyeonggi region, also known as the Seoul Capital Area, which consists of the metropolitan area of Seoul, Incheon, and the Gyeonggi province.
According to the local report, the provincial tax department would previously use the local residential registration to collect a debtor’s assets information, including assets transfers and sales. Additionally, the tax authorities used the phone numbers held by local governments to detect if a ‘delinquent’ is registered in a virtual assets exchange.
The Gyeonggi tax department then confirmed its findings on a case-by-case basis with the involved crypto exchanges. Although successful, the verification process would become lengthy, representing a problem for the provincial tax authorities.
Due to this, the province developed a new electronic management system that significantly reduced the six-month time frame to a 15-day verification process. Using this method, the provincial tax department’s success rate of crypto assets detection and seizure has dramatically improved.
As a result of the newly implemented system, the Gyeonggi tax authorities confirmed that 5,910 people who owned over 3 million won (approximately $2,200) had virtual assets accounts in exchanges, holding cryptocurrencies such as Bitcoin.
The Gyeonggi tax department confirmed it could collect 6.2 billion won ($4.6 million) in taxpayers’ debt by seizing cryptocurrencies from 2,390 people last year.
South Korea Seeks Crypto Exchanges Compliance
Noh Seung-ho, head of the Provincial Tax Justice Department, expressed the agency’s intent to “protect honest taxpayers” and do “fair taxation” to those who claim to be unable to pay their tax debt:
We will continue to take strong collection action against unscrupulous delinquents who say they do not have money to pay taxes and trade virtual assets.
According to the local report, the province plans to reinforce the cooperation system with crypto exchanges. Additionally, it plans to review administrative measures related to the refusal to comply with “the right to inquiry inspection for exchanges that are lukewarm in submitting data.”
Similarly, South Korea’s Financial Intelligence Unit (FIU) recently outlined a work plan for crypto exchanges for 2024.
The plan seeks to increase the country’s reporting and inspection of virtual asset exchanges by improving anti-money laundering (AML) measures. Non-compliant crypto exchanges would face a ban and cease operations in the country.