According to recent data issued by the nation’s National Tax Service (NTS), cryptocurrencies, particularly Bitcoin, have taken over as the main category among reported abroad assets in South Korea. The report, which was released on September 20th, emphasizes how important cryptocurrencies are becoming to the nation’s financial system.
Cryptocurrencies Lead the Way
The NTS announced that this year, 1,432 individuals and corporations reported overseas accounts primarily held in cryptocurrencies. The total reported amount in cryptocurrency assets stood at a significant 130.8 trillion South Korean won, equivalent to approximately $98 million. Remarkably, this amount constitutes over 70% of the total reported overseas assets.
While cryptocurrencies held the largest share of reported assets by total value, they were not the most frequently reported overseas assets. Deposits and savings accounts led in terms of the number of reports, with 2,952 individuals and companies disclosing holdings amounting to 22.9 trillion won (approximately $17 million). In addition, 1,590 entities reported owning stocks valued at 23.4 trillion won (approximately $17.6 million).
This data underscores the diversification of South Korean investors’ overseas holdings, with cryptocurrencies, traditional banking products, and stocks all playing prominent roles.
Related: South Korea Cracks Down on North Korean Crypto Activity
Enhanced Oversight and Stricter Enforcement
In response to this shifting financial landscape, the NTS has announced its intention to intensify scrutiny of individuals and entities failing to report their overseas financial accounts. The authority has compiled data from cross-border information exchanges, foreign exchange, and related agency notifications, setting the stage for rigorous enforcement and fines for non-compliance. The NTS explained:
“To address the risk of potential tax base erosion through virtual assets, tax authorities worldwide, including the National Tax Service, are preparing to exchange information in accordance with Information Exchange Reporting Regulations.”
This increased vigilance aligns with South Korea’s ongoing efforts to strengthen cryptocurrency tax regulations. The country has been proactive in its approach to tax enforcement, successfully confiscating millions of dollars’ worth of cryptocurrencies from tax evaders.
In August 2023, the city of Cheongju in South Korea reaffirmed its commitment to confiscating cryptocurrencies from local tax delinquents, illustrating the government’s determination to ensure compliance with tax laws in the cryptocurrency sector.
Additionally, the South Korean government previously deferred the implementation of a 20% tax on cryptocurrency gains, originally slated for early 2023. The tax is now scheduled to take effect in 2025, allowing more time for the cryptocurrency industry and investors to adapt to the regulatory framework. These developments underscore the country’s dynamic approach to cryptocurrency taxation, as it balances fostering innovation with effective tax collection.
Related: Thailand expands tax net to include overseas income, including crypto, from 2024