Tax laws

South Korea to change tax laws to tackle tax evasion by crypto investors

Cryptocurrency investors in South Korea may need to revise their tax returns to include crypto income as the laws become stricter. The government of South Korea recently proposed a review of its tax codes to allow tax authorities to seize the assets of crypto tax evaders from their digital wallets.

According to reports, the proposal was made as part of the country’s annual review of its tax system. This crackdown on tax evasion by crypto investors and high income earners will help the government cover rising welfare costs, according to the finance ministry. The government was seeking to amend a total of 16 tax codes, which will include measures to increase taxes for wealthy individuals and businesses.

The government has already made additional efforts to tackle money laundering and tax evasion in the emerging digital asset sector. However, under current rules, authorities were unable to confiscate digital assets held in a cold wallet. The amendment suggested in the code will allow them to reach the personal wallets of crypto investors.

These rules could come into force from next year.

South Korea will impose a 20% tax on Bitcoin and cryptocurrency profits from January 1, 2022. Investors and crypto companies have opposed it, but regulators have not changed notice. Crypto users who realize capital gains greater than $ 2,300 will be subject to a 20% tax under the new law.

These recommendations could result in a decrease of $ 1.3 billion in tax revenue for governments due to specific tax relief proposals for research and development in the semiconductor, battery and vaccine sectors.

Finance Minister Hong Nam-ki said:

“While this $ 1.5 trillion cannot be described as tax neutral, it is not such a big amount and something necessary as we have revised tax codes.”

In addition to revising tax codes, the government has proposed extending tax incentives to companies for hiring, especially outside the capital, Seoul. He also proposed to reduce corporate taxes for companies seeking to restore their production capacities.

The ministry is due to submit all proposals to parliament by September 3, to gain legislative approval.

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