South Korea's Cryptocurrency Asset Reporting and Taxation Strategies

South Korea's Cryptocurrency Asset Reporting

South Korean individuals and corporations have reported overseas cryptocurrency assets, including Bitcoin, totaling approximately 131 trillion won ($99 billion) this year. This accounts for over 70% of the country's reported overseas assets, as revealed by the National Tax Service (NTS). A total of 5,419 entities disclosed overseas financial accounts, with holdings in cryptocurrencies, stocks, and deposits amounting to 186.4 trillion KRW ($140 million).

Breakdown of Overseas Asset Holdings

Despite the significant value of cryptocurrency holdings, deposits and savings accounts were most frequently reported. A total of 2,952 individuals and companies reported holding 22.9 trillion KRW ($17 million) in these accounts. Additionally, 1,590 entities reported stock holdings worth 23.4 trillion KRW ($17.6 million).

Intensified Scrutiny and Tax Regulations

The NTS has announced its intent to scrutinize closely those who fail to report overseas financial accounts. By leveraging cross-border information exchange and foreign exchange data, the agency aims to prevent tax base erosion via virtual assets. South Korea has intensified its focus on cryptocurrency tax rules, leading to significant crypto seizures from tax evaders. Although a 20% tax on crypto gains was planned for early 2023, its implementation has been deferred to 2025.

Combating Illicit Activities in Cryptocurrency

Addressing concerns of cryptocurrencies being misused for money laundering, South Korean authorities are heightening their focus on over-the-counter (OTC) cryptocurrency transactions. Deputy Chief Prosecutor Ki No-Seong emphasized the need for comprehensive OTC crypto regulations, highlighting a case where individuals were indicted for illegally purchasing crypto worth $70.9 million via OTC trades. This underscores the regulatory push to mitigate illicit activities within the crypto market.