The government of South Korea has proposed an amendment to its tax code for allowing the tax authority in the country to seize and sell crypto that belongs to delinquent taxpayers. A government official said that the revision will enable direct seizing, which means the court wouldn’t have to approve a change in ownership records. Tax dodgers who hold assets in the form of digital coins would no longer be able to evade forfeiture and seizure. The 2021 Tax Law Amendment Bill was announced by the finance ministry on Monday, which is part of the country’s annual review of its tax system.
A proposal of empowering the tax authority in the country i.e. the National Tax Service (NTS) is part of the bill, which includes allowing it to seize and sell the crypto that belongs to tax delinquents, beginning from January 1st, 2022. It was elaborated by the government that there is an increase in the number of cases where cryptocurrencies are used by tax delinquents for concealing their assets. The aim of the bill is to take a hard stance against crypto owners who are indulging in tax evasion. If the proposed law is implemented, it would require crypto exchanges to cooperate with the authorities.
They will be required to transfer cryptocurrencies immediately upon request to the government. The authorities will have the freedom of searching properties and confiscating assets, as deemed necessary, in the event of non-compliance. The state coffer will benefit from the proceeds generated by the sale of the digital assets. South Korean officials have expressed their concerns about the difficulties they have had to face under the current regulations when it comes to confiscating crypto assets because they have to be done under the bond seizing regulations that exist.
According to the publication, it is possible for people to dispute the process and it is also not possible to apply for a change in ownership records by the court to crypto assets because they don’t have a physical presence. A ministry official said it is not possible to apply property seizure procedures because the assets that the government has to claim are maintained in electronic wallets. If the revision is made, the officials will be able to seize directly and not have to apply for a court-approved change when it comes to ownership records. Hence, the assets tax dodgers hold in the form of digital coins will be eligible for forfeiture and seizure.
Targeting tax evaders is part of South Korea’s probe for increasing their oversight into the crypto space for rooting out money laundering as well as other financial crimes that involve the use of cryptocurrencies. This is because President Moon Jae-in wants to expand the tax base for funding the increase in welfare spending. According to the finance ministry, the revisions made to the 16 tax codes will be submitted by September 3rd. Lawmakers have to approve the proposal for making it enforceable.
