Seoul’s affluent Gangnam District has announced a crackdown on tax evasion, targeting almost 2,000 residents to determine if they hold cryptocurrency assets.
Comprehensive Crypto Investigations
On August 6, Gangnam officials revealed plans to “check for and seize cryptocurrencies such as Bitcoin (BTC)” as part of their tax enforcement strategy. This affluent district in South Korea’s capital is home to many of the nation’s wealthiest individuals. However, local authorities claim that numerous residents are delinquent on their tax payments.
New Crypto Monitoring Tool
To address this issue, Gangnam will deploy a new crypto monitoring tool to identify and confiscate cryptocurrencies from tax evaders. The district will investigate 1,991 residents who each owe at least $2,177 in taxes. The investigation is set to commence in August and conclude by the end of October.
Officials will scrutinize these residents’ potential virtual asset holdings and will seize any discovered Bitcoin or altcoins. The authorities estimate that these tax evaders owe over $15.1 million in unpaid levies.
Utilizing Crypto Exchange Data
Gangnam officials will leverage data from major South Korean crypto exchanges to trace residents’ exchange-linked bank accounts and wallets. This information will be cross-referenced with outstanding local tax bills. South Korean local governments now possess the authority to freeze crypto wallets and demand payment upon identifying tax evaders with concealed assets.
Enforcement Measures and Historical Precedents
If the residents fail to clear their tax debts, Gangnam will forcibly liquidate the seized tokens and collect the resulting fiat currency. This initiative follows a similar approach recently adopted by Ansan, Gyeonggi Province, which announced the use of a “virtual asset platform seizure system” to recover unpaid local taxes.
Seoul has previously piloted this system successfully. In 2021, the city seized crypto assets from 1,566 individuals and 676 companies in a similar tax enforcement effort.
Addressing Financial Challenges
Gangnam District Mayor Cho Seong-myeong emphasized the necessity of this crackdown due to declining tax revenues amidst increasing administrative demands from residents.
This initiative marks a significant step in South Korea’s efforts to enforce tax compliance within its affluent districts using advanced technology and data from crypto exchanges.
