NTS seizes $100 mn plus in virtual assets from tax delinquents

(Yonhap)

South Korea’s tax authority has forcibly collected more than 140 billion won ($100.23 million) in virtual assets from delinquent taxpayers over the past four years, highlighting the growing need for more sophisticated management and monitoring systems in the country as attempts to conceal assets through cryptocurrencies increase.

According to data obtained by the office of Democratic Party Representative Kim Young-jin from the National Tax Service (NTS), the authority seized and collected virtual assets from a total of 14,140 delinquent taxpayers between 2021 and 2024, recovering 146.1 billion won in total.

It collected 71.2 billion won from 5,741 individuals in 2021, the first year of its forced cryptocurrency seizures, subsequently retrieving 36.8 billion won from 5,108 individuals in 2023 and 38.1 billion won from 3,291 individuals in 2024.

“In 2022, we focused on investigating and tracking attempts by delinquent taxpayers to transfer or conceal assets rather than pursuing forced collections thanks to a slump in the cryptocurrency market and a sharp drop in prices,” an NTS official said.

As a result, the NTS collected an additional 600 million won from four individuals.

The NTS has been implementing forced cryptocurrency seizures since 2021 to prevent large-scale and habitual tax delinquents from hiding their assets. The process involves freezing the taxpayer’s virtual asset accounts, encouraging voluntary liquidation or payment, and initiating direct sales procedures if non-compliance persists.

Meanwhile, the amount of additional tax levied on “offshore tax evasion,” including the concealment of overseas income by multinational corporations and high-income earners, hit a record high of 1.38 trillion won in 2024.

The NTS conducted 999 tax audits into offshore tax evasion cases between 2020 and 2024, imposing a total of 6.72 trillion won in additional taxes according to Representative Jo Seoung-lae of the Democratic Party. This represents an average of 1.34 trillion won per year, with the amount increasing gradually each year to reach a record high in 2024.

Tax evasion methods are becoming increasingly sophisticated and advanced as well. The NTS said that the typical practices uncovered at multinational corporations included manipulation of transfer pricing, avoidance of permanent establishment, free transfers of intangible assets, and evasion of withholding tax.