Gwacheon, a city in the South Korean Seoul district, has launched a new system to seize digital assets from tax evaders.
The new “electronic virtual asset seizing system” will allow the city to intensify its crackdown on tax cheats, which has been ongoing for the past five years. The city launched the system after noting a rise in “cases of virtual assets being used as a means of hiding delinquents’ assets,” reports one local outlet.
The new system will launch fully in March, followed by “full-scale collection procedures starting in the first half of 2025.” It targets 361 residents who city officials believe owe the local taxman KRW 3 million ($2,000) in unpaid taxes. Gwacheon is home to just over 85,000 residents.
“We will ensure the tax system is fair by taking strong responses to tax delinquents. We will actively block tax evasion by seizing virtual assets,” commented Kang Min-ah, the city’s tax division head.
While the city only just launched the new system this week, it has been seizing digital assets from tax evaders for years. According to officials, over the past five years, the city has confiscated over KRW 300 million ($205,000) from tax-evading digital asset holders. Over $70,000 was seized in 2024, pointing to a dramatic rise in efficiency in the city’s systems, even before the new system launches.
A day after the new system in Gwacheon was unveiled, another district in Seoul announced that it was ramping up its digital asset taxation. Gwanak, a district in southern Seoul with a population of over 500,000 people, said it will now demand that local exchanges hand over data related to residents who trade digital assets to assess their tax obligations.
Gwanak officials said the move is in response to the rise in digital asset transaction volumes from the locals. In particular, the district is going after 325 individuals it believes owe KRW 1 billion ($690,000) in taxes.
South Korea’s proposed 20% tax was set to take effect in January 2025. However, lawmakers agreed last December to postpone the implementation to the beginning of 2028, seven years since it was first agreed to.
Despite the delays, local governments in the East Asian country are allowed to pursue taxes from digital asset traders in their locality. Once they seize the assets, they can liquidate them if the owners don’t pay the taxes in time.
Beyond South Korea, several other governments have implemented laws that allow authorities to seize digital assets used in crime or from tax evaders. The United Kingdom implemented its version of the ‘crypto’ seizure law last April, allowing the National Crime Agency to freeze, seize and destroy any crime-related assets.
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