South Korea is changing its tax regulations to combat tax cheating by cryptocurrency investors.

As the laws become harsher, cryptocurrency investors in South Korea may have to redo their tax files to incorporate crypto revenues. South Korea's government recently suggested a change to its tax laws that would allow tax authorities to take crypto tax evaders' assets from their digital wallets.

According to sources, the idea was made as part of the country's yearly tax system review. According to the Finance Ministry, cracking down on tax avoidance by crypto investors and high-income earners will help the government afford mounting welfare bills. The administration planned to change 16 tax regulations, including measures to impose more taxes on rich individuals and businesses.

The government has already increased its efforts in the developing digital asset business to combat money laundering and tax evasion. Authorities, on the other hand, were unable to seize digital funds housed in a cold wallet under present rules. They will be able to access crypto investors' personal wallets thanks to the proposed code change.

These regulations might go into effect as early as next year. From January 1, 2022, South Korea will impose a 20% tax on Bitcoin and cryptocurrency profits. Despite the protests of crypto investors and businesses, the regulators have not changed their minds. Under the new rule, crypto users who generate capital gains of more than $2,300 will be subject to a 20% tax.

The suggestions for particular tax exemptions for research and development in the semiconductors, batteries, and vaccine industries might result in a loss of $1.3 billion in tax revenue for governments. Hong Nam-ki, the Finance Minister, stated:

“Although that 1.5 trillion isn't tax-neutral, it's not a huge sum, and it's something we needed while we altered our tax codes.”

Aside from revisiting the tax regulations, the government proposed giving businesses more tax breaks for hiring, particularly outside of Seoul. It also promised to reduce corporate income taxes for businesses who want to re-establish industrial capacity.

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