South Korea toughens stance against tax evaders who own cryptocurrency. The government is regulating crypto exchanges to bring down tax evasion.
Bitcoin prices are trading below $38,000 on August 5, 2021. Ethereum prices have recovered to $2,670 levels. ETH, the best cryptocurrency to invest in, shows a strong recovery after languishing at the $1,800 levels for many weeks.
Dogecoin is trading flat at 0.1955 levels. Litecoin crypto currency prices are trading at around the $138 levels in July and August.
Bitcoin, the best cryptocurrency to invest in, fell below $40,000 in mid-May 2021. Though BTC/USD went back to these levels in late July, it trades below the psychological $40,000 area.
Cryptocurrency Comes Under South Korea Scanner
Tax evasion in South Korea is a serious crime. The government of South Korea has begun a crackdown on crypto currency investors to see if they are evading tax payments.
The South Korean government is taking measures to bring down tax evasion in the cryptocurrency market. Many crypto currency investors hold their digital assets in crypto wallets, as authorities cannot trace them to their actual owners. Crypto investors are not paying taxes on the income generated on their crypto assets.
Moreover, those in the crypto market are involved in massive money laundering and other crimes. Crypto currencies stored in crypto wallets are not traceable.
South Korea to Regulate Crypto Exchanges
The crypto market is attracting new investors in South Korea who are willing to buy cryptocurrency at low crypto currency prices. Despite the Covid-19 pandemic, millennials want to invest in crypto currencies in huge numbers. They are quick to adopt new technology and buy cryptocurrency. According to a survey taken in 2021, around 49 South Korean workers in the age group 30 to 39 years have invested in cryptocurrency altcoins.
Authorities seized around $47 million from crypto holders. An investigation is on against those who are evading tax payment from crypto income hidden in crypto wallets. As the cryptocurrency market does not trade in physical assets, the government cannot track digital assets.
South Korea takes stringent action against tax dodgers. It prevents illegal fund transactions and money laundering, say authorities. Crypto exchanges should involve only legal transactions and payments. If exchanges detect any suspicious activities in cryptocurrencies, they have to report to the regulators.
Tax Revisions in South Korea
South Korea has a proposal to revise its tax system. Big corporates and conglomerates involved in cryptocurrencies are not paying taxes. By reviewing tax codes, tax authorities propose to come down on tax evaders.
Welfare costs are rising, and the government has to provide people to tide over the pandemic crisis. President Moon Jae-in has plans to expand the tax base to generate more tax revenue. Welfare spending requires large sums of money, says the President. His once-a-year-tax review system will increase the country’s tax revenue. The plan is to revise 16 tax codes to increase revenue. The government plans to introduce tax incentives for those companies that hire people outside densely populated Seoul. Tax cuts for reshoring production capacities are another proposal.
The Financial Services Commission is the financial regulator in South Korea. The FSC has plans to shut down around 12 local cryptocurrency exchanges. There are many allegations about illegal and fraudulent activities reported against a few crypto exchanges in South Korea. An investigation against the largest crypto exchange in South Korea, Bithumb, is going on.
Tax revenues will help to take care of Korea’s aging population. South Korea has a large senior population. The country has to take care of them, and this revenue will help the government take sufficient measures to take care of its people. Meanwhile, the young generation face severe unemployment problems.
In 2018, South Korea planned to bring a bill to ban cryptocurrency on alleged tax evasion. Bitcoin cryptocurrency prices saw a sharp drop of nearly 14%. Bitcoin prices tumbled by almost $2,000 from the highs of $14,900 in early 2018 on the crypto news.
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