By South Korea plans to launch a tracking system that aims to ensure virtual asset users aren’t avoiding taxes.
The National Tax Service has chosen a consulting firm to develop a sophisticated system for overseeing these assets, local outlet Digital Daily reported Monday. It will be capable of analyzing and managing transaction data related to digital currencies.
The Tax Service has reportedly chosen GTIC as the company to develop the virtual asset integrated management system. This decision was reportedly made at the end of February, initiating a consulting project expected to last about four months.
The report highlighted a significant surge in virtual asset investment following the approval of Bitcoin Spot ETF trading in the US. As a result, governments are now focused on regulating taxation for bitcoin transactions. They are also looking to monitor illegal activities like money laundering to ensure the integrity of the financial system.
South Korea’s decision to launch a tracking service comes as Bitcoin topped $70,000 to hit a record high on Friday. This surge was mostly attributed to increased investment in US-based Bitcoin Spot ETFs. Other factors include the upcoming bitcoin halving event in April, and expectations of a decrease in global interest rates.
South Korea Looks to Close Tax Loopholes
The initiative is aimed at overseeing data obtained through compulsory reporting of virtual asset transactions. Following the consulting phase, a proposal has been released to construct the system. If things go according to plan, the system should be released by 2025.
After updates to the Corporate Tax Act and the Income Tax Act, virtual asset businesses were mandated to submit transaction details.
However, without an analytical system in place, the National Tax Service aims to combat tax evasion and ensure equitable taxation through a comprehensive management system.
KYC Requirements for Crypto Services
The nation has adopted a proactive stance in regulating digital assets by implementing laws to stabilize the cryptocurrency market.
These regulations mandate crypto service providers to enhance their anti-money laundering and know your customer (KYC) systems, register with Korean financial authorities, open corporate bank accounts, provide real-name accounts to clients, and enforce more rigorous AML/KYC procedures.
Officials in the country are also deliberating on whether to approve Spot Bitcoin exchange-traded funds (ETFs).
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