The National Tax Service (NTS) of South Korea released a report on Wednesday that found cryptocurrencies make up the majority of the nation’s overseas assets.
South Koreans hold 131 trillion won or roughly $99billion in virtual assets outside of the country, accounting for 70% of all declared overseas assets, according to the NTS.
A total of 5,419 entities disclosed their overseas financial accounts, which cumulatively held 186.4 trillion won or $140m. This amount is spread across various assets, including cryptocurrencies, stocks, savings, and deposits.
From this, 1,432 entities, encompassing both individuals and corporations, reported holding overseas cryptocurrency accounts.
Even though cryptocurrencies held the highest value in the report, in terms of sheer number of reports, deposits and savings were predominant. A total of 2,952 entities reported deposits and savings that amounted to 22.9 trillion won or $17m. Additionally, 1,590 entities declared stocks valued at 23.4 trillion won, roughly $17.6m.
New overseas requirements
This year saw South Korea implement a mandatory reporting requirement for overseas assets. The law, introduced in June, mandates that citizens report if their foreign accounts exceed 500m won.
The NTS is taking measures to ensure compliance with this rule. The tax regulator intends to closely monitor those who neglect to declare their overseas financial holdings.
The NTS is compiling data from various sources to aid this effort. This includes cross-border information exchanges, foreign exchange data, and notifications from relevant agencies. Violators of this rule will be penalized, the NTS clarified.
South Korea intensifies crypto tax measures
South Korea, known for its favourable view on cryptocurrencies, has increasingly focused on establishing clear cryptocurrency tax regulations. Recently, the country has taken action against tax evaders by confiscating significant amounts of cryptocurrencies.
In August 2023, the city of Cheongju, North Chungcheong province’s capital, announced its intention to seize cryptocurrencies from local tax defaulters.
Following this, the Cheongju administration reached out to seven crypto exchanges in South Korea, including Upbit and Bithumb, requesting details on the crypto assets of 8,500 users. Each of these users reportedly owes at least 1 million won, or $750, in local taxes. After gathering the necessary information, the city plans to take possession of the unpaid cryptocurrencies.
While countries globally are still formulating strategies to tax virtual assets, South Korea is already laying out plans. The nation’s taxation on crypto profits, initially slated for early 2023, is now expected to be in place by 2025. Furthermore, there are discussions about imposing taxes on airdrops in the country.
