South Korean authorities intensify crackdown on unpaid taxes using digital assets
Tax regulators in Jeju City, the capital of South Korea’s largest island province, have begun targeting the crypto holdings of individuals accused of tax evasion. The operation marks part of a nationwide effort to strengthen oversight of digital assets and ensure compliance with the country’s tax laws.
Officials investigated 2,962 residents with outstanding arrears totaling 19.7 billion won ($14.2 million). Using transaction records from leading domestic exchanges — Bithumb, Upbit, Coinone, and Korbit — investigators found that 49 alleged delinquents collectively held over $166,000 worth of cryptocurrencies.
The city’s Tax Division has now designated these exchanges as third-party debtors, authorizing the freezing and seizure of the digital assets to recover unpaid dues.
Use of AI in Tax Enforcement
Jeju’s tax authority is also adopting advanced technology to improve enforcement. Tax Division Chief Hwang Tae-hoon stated that the city will “strengthen our response to tax delinquency using new assets such as virtual assets to thoroughly uncover hidden tax sources.” He added that AI-based information analysis will be key in identifying high-value tax evaders and in building a culture of honest tax payment.
A Broader National Trend
This move reflects South Korea’s broader stance on crypto taxation. Since 2021, regulators have been legally empowered to seize cryptocurrencies like Bitcoin from tax delinquents. In recent years, several local governments have acted on this authority:
- Seoul city seized $22 million worth of crypto from individuals and company heads in 2021.
- Nationwide, more than $180 million in digital assets were confiscated from tax evaders between 2021 and 2022.
- Paju City, near Seoul, also announced seizures of crypto assets from residents with unpaid taxes last year.
The crackdown comes at a time when over 16 million South Koreans — more than 30% of the population — are active crypto users. The surge in adoption has not only expanded opportunities but also created new challenges for regulators tasked with ensuring compliance.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.