South Korea's Foreign Holdings Dominated by Cryptocurrency, Tax Agency Reveals
South Korea's National Tax Service reports cryptocurrency dominates overseas assets, with heavy scrutiny on unreported foreign accounts.
Thu, 21 Sep 2023, 03:47 am UTC
Cryptocurrency's prominence in South Korea's foreign holdings has been brought to light. The country's National Tax Service (NTS) revealed on September 20 that a majority of overseas assets reported this year were in the form of digital currencies. Specifically, 1,432 entities, including both individuals and corporations, declared they had foreign cryptocurrency accounts.
These crypto assets totaled an impressive 130.8 trillion South Korean won, equivalent to $98 million. This number encompasses over 70% of the aggregate declared foreign assets. Meanwhile, official figures show that 5,419 entities declared their overseas financial accounts, accumulating 186.4 trillion won ($140 million) when combined. This figure includes cryptocurrencies, stocks, and conventional deposits and savings.
Although cryptocurrency takes the lead in value, traditional savings and deposit accounts were most frequently reported. A total of 2,952 companies and individuals disclosed holding 22.9 trillion won ($17 million) in these accounts. Furthermore, 1,590 entities declared they possessed stocks valued at 23.4 trillion won ($17.6 million).
Tax compliance has been a significant concern for the NTS. It emphasized its intent to scrutinize unreported foreign financial accounts meticulously. The tax agency has been gathering a variety of data, including information from foreign exchanges and other relevant institutions. The NTS aims to ensure transparency and said it's ready to penalize rule violators. This is in line with global tax authorities' shared goal of countering potential tax losses via virtual assets. Accordingly, organizations, including the NTS, are coordinating efforts to share information as per the Information Exchange Reporting Regulations.
South Korea's attitude towards cryptocurrency remains progressive. The country has implemented stringent cryptocurrency tax laws recently, even seizing millions from those who evade taxes. In a move last month, the city of Cheongju announced its initiative to seize cryptocurrency from residents who owe taxes.
Moreover, it's noteworthy that the South Korean government had once planned a 20% tax imposition on cryptocurrency profits starting early 2023. However, this has now been postponed to 2025.
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