South Korean Province’s Digital Tax Tracking Nets $4.6M from Crypto Accounts

Key Takeaways

• Gyeonggi Province recovers $4.6 million in unreported taxes in 2023 via a digital system tracking crypto accounts of tax evaders.
• By using resident registration numbers, officials can trace mobile phone numbers, improving their ability to detect memberships on virtual currency exchanges

Gyeonggi Province, located in South Korea, is leading the charge in modernizing tax collection methods by embracing innovative technology to track down taxpayers with virtual assets.

In a groundbreaking announcement on February 22nd, the province revealed that it had successfully recouped 6.2 billion won in overdue local taxes thanks to the implementation of the ‘delinquent virtual asset tracking electronic management system,’ marking a significant milestone for the country.

This forward-thinking system enables authorities to efficiently track, seize, and collect assets held by delinquent taxpayers in the virtual realm. By leveraging resident registration numbers, officials can trace mobile phone numbers, significantly boosting their ability to detect membership registrations on virtual currency exchanges.

Gone are the days of lengthy bureaucratic processes; previously, identifying delinquent taxpayers and their virtual assets could take up to six months to complete seizures and sales. However, with Gyeonggi Province’s electronic management system, this timeline has been dramatically reduced to just 15 days, signaling a remarkable improvement in efficiency.

Over the past year, the province identified 5,910 individuals owing more than 3 million won in local taxes who held accounts for virtual assets such as Bitcoin. From this group, a total of 6.2 billion won in arrears was collected from 2,390 offenders.

Noh Seung-ho, head of the Provincial Tax Justice Department, emphasized the province’s commitment to taking decisive action against unscrupulous delinquents, ensuring fair taxation and protecting honest taxpayers.

Gyeonggi Province’s success comes at a time of heightened cryptocurrency trading activity in South Korea, especially following a market rebound. The Financial Intelligence Unit (FIU) reported a significant increase in alerts of potentially suspicious transactions from crypto service providers in 2023, highlighting the urgent need for robust regulatory measures.

In response, the South Korean government, through its FIU, announced on February 12th that cryptocurrency exchanges failing to meet enhanced standards would be barred from the nation’s crypto marketplace.

This crackdown extends to digital asset firms seeking entry into South Korea’s cryptocurrency market, underscoring authorities’ commitment to combating illicit activities such as money laundering and market manipulation.

Additionally, the government is exploring the adoption of a trading system recommended by the Financial Action Task Force (FATF), which would automatically halt suspicious transactions before investigations begin