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Usha Yadav
May 19, 2022
by Usha Yadav

South Korean Tax Agency Reportedly Fines Terraform Labs $78M for Tax Violations

South Korean Tax Agency
Foreign-registered firms are recognised as domestic under South Korean corporation tax regulations if the country's decision-making process and operations are conducted. In the aftermath of the Terra ecosystem's demise, Terraform Labs and co-founder Do Kwon have continued to face legal challenges. The crypto business has now fallen under the spotlight of the national tax office, following early rumours of a probable congressional hearing and an inquiry by the 'Grim Reapers' financial crimes team.  According to a report from Naver News, South Korea's national tax department has fined Terraform Labs and its co-founder a total of 100 billion won ($78 million) for tax evasion.

According to the report, the Kwon had been dissatisfied with crypto taxation in the country since December and had attempted to liquidate Terra's domestic activities right before the historic LUNA catastrophe.

Terraform Labs Investigated by Tax Officials

Terraform Labs was first investigated by tax officials in June of last year, allegedly for dodging corporate and income taxes. According to the study, Terraform Labs and its multiple companies were discovered to be registered in both the Virgin Islands and Singapore. Even though both subsidiaries were registered in another country, South Korea was the 'place of actual management. According to Korea's company tax laws, the area of real management is evaluated for tax purposes rather than the registration country. After Terraform Labs transported Luna from Terra Singapore to Luna Foundation Guard (LFG) to dodge taxes or make up for the loss of anchor protocol, the tax authorities were notified.

Terra subsidiaries in the Virgin Islands were fined 4.66 billion won ($3.6 million) in income tax and 44.7 billion won ($34.7 million) in corporation tax earlier this month. After the LUNA tragedy, South Korean law enforcement agencies and policymakers have pounced on Do Kwon and his friends. After 2.5 years, the "Grim Reapers of Yeouido," a particular financial crime investigative unit, was called back to look into the project.

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Terraform Labs South Korean Tax Agency
South Korean Tax Agency Reportedly Fines Terraform Labs $78M for Tax Violations
Usha Yadav
Usha is a diehard crypto enthusiast and has been actively writing on different facets of the blockchain and crypto world. She has authored many research articles on cryptocurrency and aims to provide informational and quality content to readers. She firmly believes that crypto has a great potential to redefine the world of finance and blockchain.

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