The Gyeonggi province of South Korea has introduced a really interesting system named ‘Arbitrator Virtual Asset Tracking Electronic Management System.’ This initiative has proven to be a game-changer, successfully recuperating approximately 6.2 billion won (around $4.7 million) in overdue taxes last year. The system introduces an advanced method of tracing tax defaulters’ personal information, such as phone numbers, by cross-referencing them against crypto trading platforms.
Streamlining Tax Collection Efforts
The introduction of this system marks a significant advancement in how authorities approach tax collection from crypto traders. Previously, tracking down tax defaulters was a cumbersome process, often extending up to six months per case. Now, leveraging difficult residents’ registration numbers to uncover their mobile phone details, the system enhances the effectiveness of identifying memberships in virtual currency exchanges.
This efficient approach led to the identification of 5,910 individuals with virtual asset accounts, including Bitcoin, who were evading taxes. Remarkably, the system enabled the recovery of arrears from 2,390 people over the past year. The director of the tax department emphasized the continued effort to enforce strong collection measures against those evading taxes under the guise of trading in virtual assets, aiming to safeguard the interests of conscientious taxpayers and promote equitable taxation.
Bolstering Crypto Market Regulation
This initiative is a testament to South Korea’s dedication to regulating the cryptocurrency market and creating a just economic landscape. The Financial Intelligence Unit (FIU) of South Korea reported a notable 49% surge in suspicious crypto transactions in 2023, highlighting the increased vigilance and collaboration with enforcement agencies to mitigate illicit cryptocurrency activities.
The forthcoming Virtual Asset User Protection Act, set to be enacted in July 2024, signals a significant regulatory overhaul. It introduces stiff penalties for crypto-related offenses, with the most severe cases involving illicit gains over $3.7 million facing life imprisonment. These measures are in line with South Korea’s objective to foster a transparent and accountable cryptocurrency market, anticipated to generate annual revenues of $2.2 billion by 2027 according to Statista data.