In recent years, crypto assets such as Bitcoin and Ether have witnessed increased adoption in various countries worldwide. In a testament to this growing trend, South Korea’s tax organization disclosed that cryptocurrencies accounted for the largest proportion of taxpayers’ assets overseas.
This comes after the East Asian country tweaked its tax policy, mandating citizens to declare their overseas assets yearly. According to local news sources, the policy demands that Korean nationals who own 500 million won in assets, including cryptocurrencies, must report their holdings in offshore accounts or exchanges.
Crypto Assets Make Up 70% Of South Koreans’ Overseas Accounts
In a report published on September 20, South Korea’s National Tax Service (NTS) revealed that 5,419 individuals and organizations declared their overseas financial accounts in 2023. According to the official data, 1,432 entities from this total figure reported cryptocurrencies in their offshore holdings.
This NTS announcement revealed that South Koreans declared a total of 130.8 trillion won (equivalent to roughly $98 billion) in overseas crypto holdings. This figure represents more than 70% of the total amount in reported overseas assets.
While cryptocurrencies were the largest offshore assets in terms of value, deposit and savings accounts were the most frequently reported assets. A total of 2,952 entities declared 22.9 trillion won (approximately $17 billion) in such accounts.
In total, South Korean taxpayers reported 186.4 trillion won ($140 billion) as their overseas assets. This figure includes not only crypto assets and deposit/savings accounts but also stocks worth 23.4 trillion won ($17.6 billion).
In the announcement, the National Tax Service asserted that it plans to investigate entities that fail to declare their overseas financial accounts. The tax authority claims it has been gathering cross-border information exchange data, foreign exchange data, and other related information, with plans to impose fines on those violating the rules.
South Korea’s NTS said:
In order to respond to the risk of potential tax base erosion through virtual assets, tax authorities around the world, including the National Tax Service, are preparing to exchange information in accordance with the Information Exchange Reporting Regulations.
South Korea Ramp Up Crypto Regulatory Efforts
South Korea has maintained its status as a popular crypto-friendly nation in the Asian region. The authorities have often been lauded for strengthening the oversight of the country’s crypto landscape with clear digital assets rules and regulations.
Specifically, South Korea’s regulators have been increasing their scrutiny of various crypto markets due to a surge in illicit activities. According to a recent report, the financial watchdogs are actively trying to check the largely unregulated OTC crypto domain.
Furthermore, South Korea has been focused on curbing tax evasion through crypto assets, confiscating millions of dollars worth of crypto assets from defaulting citizens. In August, Bitcoinist reported that the government of Cheongju sought cooperation from various exchanges to punish tax delinquents.
In 2022, the South Korean authorities delayed plans to impose tax on crypto assets. This proposed 20% capital gains tax on digital assets, initially slated for the beginning of 2023, will now be effective at the start of 2025.
The cryptocurrency total market cap on the daily timeframe | Source: TOTAL chart on TradingView