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Gyeonggi Province Cracks Down on Crypto Tax Evaders, Recoups £3.9 Million in Undeclared Taxes

The Gyeonggi Provincial Tax Justice Department, situated in the most densely populated province of South Korea, amassed 6.2 billion won (£3.9 million) in undeclared taxes during 2023 by deploying a digital tracking system aimed at cryptocurrency accounts of tax evaders.

As per a report by Yonhap News Agency on February 22, the Gyeonggi tax department utilised resident registration data of “delinquents,” tracing their mobile phone numbers to uncover their accounts on digital asset exchanges.

The key innovation lies in a digital tracking system.

Previously, tax services had to individually request information from crypto exchanges, a process spanning up to six months for communication and document exchange.

According to Yonhap, the province’s digital management system truncated this period to around 15 days.

Leveraging the system, the provincial tax department pinpointed the crypto accounts of 5,910 individuals, each indebted with over 3 million won (£1,800) in local taxes.

From 2,390 offenders, the department recouped 6.2 billion won (£3.9 million).

The province intends to fortify collaboration with virtual asset exchanges and to “review administrative measures” for platforms unwilling to cooperate.

As Noh Seung-ho, head of the Provincial Tax Justice Department, affirmed:

“We will continue to take robust collection action against unscrupulous delinquents, such as those who claim insolvency to evade taxes and engage in virtual asset trading.”

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Meanwhile, South Korea’s Financial Intelligence Unit (FIU) actively urges crypto exchanges to report any transactions raising suspicions of money laundering and illegal “foreign exchange outflow.”

The agency also plans to introduce a “virtual asset analysis system,” scrutinising and analysing virtual asset transaction specifics and “complex movement paths.”

In early February, the South Korean government issued a fresh update to the Virtual Asset Users Protection Act, imposing significant criminal penalties and fines for infractions.

These include fixed-term imprisonment exceeding one year or a fine ranging from three to five times the amount of illicit profits.

Culprits who amass over 5 billion won (£3.1 million) from unlawful crypto trading schemes face life imprisonment.

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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