Cryptocurrencies: The Dominant Overseas Asset
In a remarkable revelation, the National Tax Service (NTS) of South Korea has announced that a whopping 70% of all reported overseas assets are invested in cryptocurrencies such as Bitcoin. According to the data released on September 20, 1,432 entities reported owning a collective sum of 130.8 trillion Korean won, or $98 million, in overseas crypto accounts.
Diverse Portfolio: A Closer Look at the Assets Held
Despite the crypto dominance, a variety of other assets were also reported. A total of 5,419 individuals and corporations disclosed holding assets such as stocks, deposits, and savings in overseas accounts. These reported assets amounted to 186.4 trillion KRW, or $140 million.
Interestingly, while crypto assets topped in terms of value, deposits and savings led in the number of reports, with 2,952 entities reporting 22.9 trillion KRW ($17 million) held overseas. Additionally, stocks were reported by 1,590 entities amounting to 23.4 trillion KRW ($17.6 million).
NTS Plans: Increased Scrutiny and Regulation
In the wake of this substantial revelation, the NTS is gearing up to enhance its scrutiny on individuals and corporations failing to report their overseas financial accounts. The organization aims to gather a rich database through the assimilation of cross-border information exchange data, foreign exchange data, and related agency notification data.
The authority has cautioned that non-compliance with the Information Exchange Reporting Regulations would result in hefty fines, reflecting a global trend in tightening regulations around virtual assets to prevent tax base erosion.
South Korea: A Hotspot for Crypto Activities
South Korea stands as a frontrunner in the global crypto landscape, harboring a friendly stance towards cryptocurrencies. In recent years, the country has intensified its focus on establishing robust cryptocurrency tax rules.
August 2023 saw the city of Cheongju reiterating its strategy to seize cryptocurrencies from local tax defaulters, signifying the government’s serious approach towards ensuring tax compliance in the crypto domain.
Future Prospects: Taxation on Crypto Gains
Despite the regulatory tightening, the government showcased a slight relaxation when it postponed the 20% tax on crypto gains initially slated to kick off in early 2023. This tax has now been deferred to 2025, granting South Korean crypto investors a temporary reprieve and a longer timeframe to align their investments with the forthcoming tax regulations.
By highlighting the considerable share of cryptocurrencies in the overseas assets of South Korean entities, the NTS report underlines the meteoric rise and acceptance of virtual assets in the nation. As the government sharpens its regulatory framework, it will be interesting to witness the trajectory of the crypto landscape in South Korea in the coming years.