South Korea’s National Tax Service (NTS) is ramping up efforts to curb tax evasion involving cryptocurrencies. This move comes as the country prepares to implement a new 20% tax on crypto gains. The government is determined to regulate the digital asset space and ensure tax compliance across all sectors.
The NTS has been closely monitoring the crypto activities of major tax debtors to identify unlawful practices. For instance, law enforcement officials investigated one person who decided to launder cash from the sale of a property and used the money to buy twenty different cryptocurrencies. The individual concealed these investments by transferring them to different e-wallets owned by their mother and cousin. Authorities followed these dealings, leading to the case for annulment of the transfer of these assets.
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South Korea’s Updated Crypto Tax Framework
The country’s Democratic Party has proposed a 20% tax on crypto gains exceeding 50 million Korean won ($35,919) and an additional 2% local tax. Initially introduced in 2021 under former President Moon Jae-in, this proposal faced strong opposition from investors and was delayed. The revised framework now significantly raises the taxable gain threshold from 2.5 million won ($1,791) to 50 million won, offering relief to most retail investors.
Additionally, the updated plan allows taxpayers with incomplete records to claim up to 50% of the sale price as the acquisition cost. These adjustments should feed out the market and reasonably change crypto taxation.
South Korea’s new tax measures reflect the government’s broader vision to expand the crypto industry while ensuring regulatory compliance. The latest attempt focuses on increasing innovation within the sector and managing probable risks. These steps aim to foster market growth, sustain the country’s exponential expansion of digital asset industries, and attract investors.
As South Korea enforces stricter measures against tax evasion, the revised tax framework highlights the government’s effort to balance regulation with crypto market growth.
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