South Korea’s Innovative Tax Framework Targets Crypto Evasion

SEOUL, South Korea, Monday, March 18, 2024 – South Korean authorities are developing a tax system specifically designed to address cryptocurrency tax evasion, according to local media reports. ¹

The move comes amid a surge in cryptocurrency investment within the country and concerns that existing tax regulations are inadequate for capturing capital gains from crypto transactions.

As reported by local media sources, GTIC, a consulting firm, has been chosen to spearhead the development and execution of this system. The firm has initiated a consulting project focused on this matter, scheduled to span the next four months.

The new system is expected to leverage data-sharing agreements with cryptocurrency exchanges and implement stricter reporting requirements for individual investors.

This would allow authorities to track cryptocurrency holdings and transactions more efficiently, potentially deterring tax evasion attempts.

South Korea has recently emerged as a global hub for cryptocurrency trading, with a large and active user base.

However, concerns have grown about the potential for tax revenue losses due to the anonymous and decentralized nature of cryptocurrency transactions.

The exact details of the new tax system, including reporting thresholds and tax rates, are still under development.

The South Korean government is expected to finalize the system in the coming months.

This initiative reflects a broader trend among governments worldwide as they grapple with how to regulate and tax the burgeoning cryptocurrency market.

Sources