South Koreans Report $98.7 Billion in Overseas Crypto Assets
The National Tax Service (NTS) of South Korea has revealed that South Koreans have reported overseas crypto assets worth 130.8 trillion won ($98.7 billion), which make up 70% of the nation’s total overseas assets. These crypto holdings are owned by 1,432 individuals and corporations, with an average of $68.4 million in crypto holdings per entity.
On the other hand, deposits and savings accounts only accounted for 22.9 trillion won or $17 billion of the total, reported by 2,952 people and businesses. The United States is the most popular country for South Korean companies to hold overseas accounts, followed by Japan and Britain. Similarly, most individuals also hold accounts in the U.S., followed by Singapore and Hong Kong.
Additionally, 1,590 organizations disclosed owning shares worth 23.4 trillion won ($17.3 billion).
South Korea taxpayers declared overseas cryptocurrency assets worth 130.8 trillion won ($98.5 billion). 1,432 entities reported these assets after new reporting requirements were introduced. These crypto holdings represent 70.2% of total declared foreign assets. New legislation…
— zimagetsfox.eth (@zimagetsfox) September 20, 2023
Tax Authorities Crack Down On Undisclosed Crypto Assets
Despite being crypto-friendly, South Korea is taking measures to tax crypto holders, particularly due to the discovery that many individuals use crypto to hide their assets and evade taxes.
In August, the city of Cheongju announced plans to seize cryptocurrencies from local tax evaders. Seven South Korean crypto exchanges were asked to investigate the holdings of thousands of tax evaders. Following the inquiries, the city intends to confiscate cryptocurrencies from these individuals. This has become a common practice in South Korea as authorities crack down on tax evasion.
In 2021 and 2022, the South Korean government seized cryptocurrency valued at 260 billion Korean won ($180 million) from tax evaders. The Seoul municipal government also confiscated cryptocurrency worth 25 billion won ($22 million) from individuals and business executives in 2021.
The NTS has expressed its intention to closely monitor individuals who fail to disclose their foreign bank accounts and holdings. It has been gathering cross-border information exchange data and foreign exchange data, and will impose fines on those who violate the rules.
“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,” stated the NTS.
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Hot Take: South Koreans Lead in Reporting Overseas Crypto Assets
South Korea is leading the way when it comes to reporting overseas crypto assets. With $98.7 billion worth of holdings disclosed by 1,432 entities, it’s clear that South Koreans are embracing cryptocurrencies. However, tax authorities are cracking down on undisclosed assets as they discover that many individuals use crypto to evade taxes. The recent move by the city of Cheongju to seize cryptocurrencies from tax evaders is just one example of this trend.
As governments around the world become more aware of the potential tax base erosion caused by virtual assets, we can expect increased scrutiny and regulation in the crypto space. It’s important for crypto holders to stay compliant with tax laws and properly disclose their assets to avoid legal consequences.
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