SEOUL: South Korea’s ministry of finance said on Monday that it will strengthen its enforcement of tax fraud by cryptocurrency dealers and wealthy people as it pursues new revenue to cover growing welfare spending.
Starting next year, the government proposes amending tax laws so that tax officials can take crypto property owned by tax evaders even if their cryptocurrencies are kept in payment systems. Current regulations make it difficult for officials to seize digital property kept in digital wallets, however these accessible via exchanges might be confiscated to pay back taxes.
Pursuing after fraudsters is part of South Korea’s larger investigation into tightening regulation of crypto exchanges in order to seek off money smuggling and other financial crimes using cryptocurrency, as President Moon Jae-in looks to widen the tax base to support more social expenditure.
As South Korea became the world’s fastest-aging society with the lowest delivery charge everywhere in 2020, the government has been raising taxes on high incomes and corporations to ensure affluent citizens shoulder the cost of price increases of an aging population. Monday’s plan is part of the federal government’s once-a-year review of its taxation system, which aims to modify all 16 tax codes.
According to the ministry, the modifications will result in a decrease in tax revenue of at least 1.5 trillion dollars ($1.30 billion) between now and 2026, like tax breaks for research and development in the semiconductor, battery, and vaccine sectors will more than offset any extra income expected from high-income earners.
“Although that 1.5 trillion can’t be described as tax neutral, it isn’t that big of an amount and something necessary as we revised tax codes,” finance minister Hong Nam-ki said at a news conference.
The government also suggested boosting tax breaks for businesses who hire outside of Seoul, as well as lowering corporate income taxes for businesses that restore the industrial base.
According to the statement, the ministry will present the tax overview to parliament by September 3 since the plan requires legislative approval to become enforced.