South Korean City Introduces Plan to Capture Additional Tax Evaders’ Cryptocurrency

The South Korean city of Gwacheon has announced it will implement an IT solution to aid in capturing, freezing, and liquidating additional cryptocurrency from residents who evade taxes.

According to Vitality Kyungjae, the city – located in Gyeonggi Province – plans to establish “its own digital asset seizure system.”

South Korean City to Initiate Its Own Efforts in Pursuit of Tax Evaders’ Crypto

Currently, cryptocurrency trading is not subject to taxation in South Korea. However, Seoul has granted local tax authorities the authority to seize cryptocurrency owned by “ordinary” or “large-scale” residents who neglect to pay local taxes.

The South Korean city of Gwacheon. (Source: NordNordWest [edited][CC BY-SA 3.0 DE])

Until recently, Gwacheon relied on IT solutions managed by the broader Gyeonggi Province to identify cryptocurrency wallets belonging to tax offenders residing in the city.

Tax officials utilized the system to scan local cryptocurrency exchange wallet data. Once they identified wallets associated with tax delinquents from Gwacheon, they could proceed to seize the funds.

In some cases, residents subsequently settled their outstanding tax obligations. In other instances, the province liquidated the assets and transferred the fiat currency to the city.

However, Gwacheon’s decision to develop its own IT solution, independent of Gyeonggi Province’s system, indicates that smaller municipalities may seek to enhance their efforts in combating tax evasion.

The city has a population of 85,397, according to the Korea Ministry of the Interior and Safety’s 2024 statistics.

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Gwacheon Targets 361 ‘Tax Evaders’

Gwacheon stated that its solution would go live next month. Officials indicated that they would follow up with “full-scale collection procedures beginning in the first half of 2025.”

These efforts have already produced notable results. Over the past five years, Gwacheon claims to have seized cryptocurrency valued at approximately 300 million won (just under $205,000) from tax evaders.

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In 2024, Gwacheon tax officials confiscated more than a third of this total, further indicating that the city is becoming more effective in its cryptocurrency collection efforts.

The city noted that it was responding to a significant increase in cryptocurrency-related activities in Gwacheon and beyond.

Consequently, it mentioned that the city has observed a rise in “instances of digital assets being used as a means of concealing delinquents’ properties.”

Gwacheon plans to focus on locating cryptocurrency wallets belonging to “361 residents who have failed to pay more than 3 million won [just over $2,000] in local taxes.”

The city reported that this group owes Gwacheon over $12.8 million in taxes.

“We will ensure the tax system is fair by taking strong actions against tax delinquents. We will actively prevent tax evasion by seizing digital assets.”

Gwacheon Tax Department Head Kang Min-ah

Authorities in South Korean cities such as Goyang have also begun utilizing similar solutions to seize cryptocurrency from residents with outstanding traffic fines.

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