South Korea is trying to make it tougher for tax evaders to hide their crypto assets by giving auditors the legal authority to track and seize assets held in domestic exchanges and private wallets.
On July 26, the Ministry of Economy and Finance (MOEF) held a meeting to discuss ways to "develop" the nation's tax system.
During the meeting, which was hosted by the country's finance minister Hong Nam-ki, MOEF revealed its proposal for amending the National Tax Collection Act. The amendments would give auditors the authority to track and confiscate crypto assets of anyone who’s defaulted on tax payments, even those held in private wallets. Auditors would have the right to demand that exchanges transfer such assets to a state-designated wallet.
If investigations uncover any virtual assets in private wallets, auditors have the right to demand keys from suspects by threatening jail time or penalties.
The updated law would also give the state the right to sell off any confiscated crypto assets and convert them to fiat.
The current law classifies crypto assets held by tax evaders as “bonds,” meaning auditors have to go through third-party debt collectors in order to seize them. This makes it difficult to track assets and to confiscate crypto held in private wallets. Third-party debt collectors also tend to have a difficult time dealing with uncooperative exchanges who refuse to give up their clients.
The updated law would give auditors the legal authority to directly track and confiscate any virtual assets held by tax evaders and to conduct search and seizures of crypto exchange offices.
If the National Assembly passes the amendments, they would go into effect starting Jan. 1, 2022.
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