"'No Money, So What' Hospital Director Owing 2.7 Billion Won... Voluntarily Pays After Hidden Cryptocurrency Seized"

2,416 Tax Evaders Hiding Assets in Cryptocurrency... 36.6 Billion Won Collected

Cases of Concealing Real Estate Transfer Payments Using Virtual Assets. Photo by National Tax Service.

[Asia Economy Reporter Kim Bong-ju] Mr. A, who runs a hospital in Gangnam-gu, Seoul, was living a luxurious life, including residing in a high-end apartment, yet he was included on the National Tax Service's delinquent taxpayer list for failing to pay 2.7 billion won in taxes, including income tax.

The National Tax Service was at a loss as there was no way to verify Mr. A's assets to collect the taxes. This was because Mr. A had converted his income into virtual assets beyond the reach of the National Tax Service.

However, the situation reversed recently as the National Tax Service gained the authority to forcibly collect virtual assets. When the National Tax Service seized approximately 3.9 billion won worth of virtual assets hidden by Mr. A, he immediately paid all his taxes.

At the time of seizure in January, the value of virtual assets was about 40 million won per Bitcoin, and Mr. A had believed that the price of virtual assets would rise further.

On the 15th, the National Tax Service announced that it identified 2,416 delinquent taxpayers holding virtual assets and collected or secured a total of 36.6 billion won in cash or bonds.

Many delinquent taxpayers held virtual assets instead of tangible assets such as cash, real estate, or stocks to avoid paying taxes.

The National Tax Service recovered taxes by blocking delinquent taxpayers from withdrawing assets held in virtual asset exchanges.

On the 15th, Jeong Cheol-woo, Director of the Tax Collection and Legal Affairs Bureau at the National Tax Service, announced that they secured 36.6 billion KRW in cash collection and bonds from 2,416 high-value tax delinquents who concealed assets using virtual assets such as Bitcoin.
[Image source=Yonhap News]

Another delinquent taxpayer who sold real estate in Gyeonggi-do for 4.8 billion won had resisted paying 1.2 billion won in capital gains tax but was found to be holding 1.2 billion won worth of virtual assets this time. He eventually sold the cryptocurrency and paid the full amount of the delinquent capital gains tax.

This recovery was made possible thanks to past precedents and legal amendments. The status of virtual assets as property was clarified through last year's amendment to the "Act on Reporting and Using Specified Financial Transaction Information" and the 2018 Supreme Court ruling.

Based on this, the National Tax Service began receiving information on virtual asset holdings of delinquent taxpayers with arrears exceeding 10 million won from domestic cryptocurrency exchanges such as Bithumb and Upbit earlier this year and started seizing assets.

Delinquent taxpayers, anticipating that the value of cryptocurrencies would rise further following the notice of forced disposition, began paying their taxes voluntarily.

Virtual assets are expected to no longer be used as a channel to hide profits. With the enforcement of the Specified Financial Information Act on the 25th, tax evasion through virtual assets is expected to become even more difficult.

A National Tax Service official stated, "From the 25th, when virtual assets are included under the Specified Financial Information Act, virtual asset exchanges will be obligated to report suspicious illegal property transactions and high-value cash transactions."

Meanwhile, if hidden assets of high-value habitual tax delinquents are reported, rewards of 5-20% of the collected amount will be paid, with a maximum reward of up to 2 billion won. Reports can be made by dialing 126 without an area code or at reporting centers established at each regional National Tax Service office.

This content was produced with the assistance of AI translation services.