Gyeonggi Province Completes Korea's First Electronic Management System for Tracking and Seizing Delinquent Taxpayers' Virtual Assets like Bitcoin

[Suwon Ilbo = Reporter Park No-hoon] Gyeonggi Province has completed Korea's first 'electronic management system' that manages all delinquent tax collection procedures—including tracking, seizing, and collecting virtual assets such as Bitcoin held by delinquent taxpayers—through a program.

Operations will begin next year, and patent procedures for the system are currently underway.

According to Gyeonggi Province on the 29th, the province completed the 'electronic management method for cryptocurrency delinquent tax collection of tax delinquents' program in September after beginning development in January. The program recently completed pilot operations through collaboration with virtual asset exchanges Korbit and Bithumb, and Pocheon City.

Operational deployment is scheduled for January.

Previously, the process took approximately 6 months after Gyeonggi Province sent the list of delinquent taxpayers to virtual asset exchanges and proceeded with detailed investigations, seizures, and collections. With the electronic management system, the delinquent tax collection procedure will be reduced to around 15 days.

Additionally, by utilizing big data to track virtual asset holdings, delinquent tax collection revenue is expected to increase.

Previously, the complex procedures posed significant challenges in investigations and delinquent tax collection targeting virtual asset exchanges.

When local governments send lists of delinquent taxpayers to cryptocurrency exchanges, the exchanges verify membership registration through phone numbers. Adding processes for tracking asset scale, investigation, seizure, and sale of delinquent taxpayers' virtual assets required sending official documents individually, receiving responses, and requesting further cooperation—a process that took approximately 6 months.

'Electronic management of cryptocurrency delinquent tax collection for tax delinquents' was developed to dramatically improve the success rate of identifying exchange memberships by tracking mobile phone numbers using resident registration numbers held by local governments, and to shorten the delinquent tax collection process. It was explained as a type of electronic post office.

When the province inputs the list of delinquent taxpayers into the system, all processes—including investigation and tracking of virtual assets held by delinquent taxpayers, seizure, asset transfer and sale, collection in Korean won, and seizure release—proceed within the system without requiring separate additional work.

However, seized virtual assets of delinquent taxpayers are transferred to the local government's account according to amended laws, and the local government directly conducts forced sale. Currently, account creation and virtual account linking work are underway with cooperation from Korbit among the exchanges and Shinhan Bank.

In addition to existing partner exchanges, the province is pursuing partnership agreements with other virtual asset exchanges for delinquent taxpayer investigations, and plans to conduct the first seizure of virtual assets using the 'electronic management system' in the first half of next year.

Ryu Young-yong, Director of the Tax Justice Division at Gyeonggi Province, said, "While virtual assets have been difficult to track and collect in the past, the electronic management system now enables seamless collection activities against habitual delinquent taxpayers and promotes a culture of faithful tax payment."