In a significant move to recover local tax arrears, North Gyeongsang Province in South Korea has seized cryptoassets valued at approximately $890,000 from residents who have failed to pay their taxes. This initiative is part of a broader strategy aimed at collecting around $136 million in local tax arrears before the year ends.
According to reports from Daekyung Ilbo, as of the end of August, the province had already collected over $35 million of this total, highlighting the urgency of their campaign. The newly launched two-month intensive settlement recovery effort, which began on October 14 and will run until December 13, involves a coordinated effort from local government leaders and tax officials.
Targeted Approach to Tax Collection
North Gyeongsang Province has established “Local Tax Arrears Collection Teams” dedicated to systematic and comprehensive tax collection activities. These teams are equipped to mobilize quickly and effectively to identify and seize the assets of tax delinquent residents, including those who hold cryptocurrency.
As part of this crackdown, the province plans to proceed swiftly with the sale of seized crypto assets, which will likely involve liquidating the coins on various cryptocurrency exchanges. South Korean law permits local tax authorities to obtain client information from domestic crypto exchanges, allowing them to match wallet addresses with records of unpaid tax bills.
A Firm Warning to Crypto Holders
The province's approach sends a clear message to tax evaders: settle your debts or face the liquidation of your crypto assets. In the past, local governments have issued similar ultimatums, compelling tax dodgers to either pay their debts in fiat currency or see their cryptocurrency sold off to cover the owed amounts.
This aggressive strategy aligns with efforts seen in other provinces and metropolitan cities across South Korea, where authorities have successfully liquidated millions of dollars worth of cryptocurrencies, including Bitcoin and Ethereum, as part of their tax collection initiatives.
The Wider Implications
The move by North Gyeongsang Province reflects a growing trend among local governments in South Korea to crack down on tax evasion, particularly in the rapidly evolving landscape of digital assets. As cryptocurrency becomes increasingly mainstream, tax authorities are adapting their strategies to ensure compliance and bolster local revenue.
As the recovery campaign unfolds, residents are reminded of their obligations to settle outstanding taxes, or risk losing access to their digital assets. With the deadline approaching, it remains to be seen how many will take the necessary steps to avoid confiscation.
October 2024, Cryptoniteuae