Warning to South Korean Crypto Traders: Declare Overseas Assets or Face Tax Consequences
Trading cryptocurrencies in South Korea comes with a new twist for the upcoming tax year. Traders will now be required to report their capital gains and pay taxes on profits exceeding a certain threshold. Failure to disclose overseas crypto assets could lead to severe consequences, warns Kim Dae-kyung, a tax expert at Hana Bank Asset Management group.
- Crypto trading profits exempt from taxes in South Korea for domestic trades
- New law mandates declaration of capital gains and payment of tax on profits over $2,100 threshold
- Holdings on foreign exchanges considered overseas assets, must be reported on tax declarations
Potential Risks for Non-Compliance
Kim emphasized the importance of declaring overseas assets as tax authorities now have access to international account information. Failure to comply could result in significant fines or even criminal prosecution for crypto traders. South Korean lawmakers updated tax regulations in 2020 specifically targeting accounts used for trading cryptoassets overseas.
- Data sharing between tax authorities allows access to individual overseas account information
- Fines for non-reporting can be steep, around 10-20% of wallet balances
- Crypto-specific clauses added to tax code to cover overseas crypto trading accounts
Expanding Global Regulations and Penalties
Global crypto exchange regulations have tightened, requiring exchanges to share data on token wallets. The escalation of such regulations has made it easier for tax authorities to identify undisclosed assets. President Yoon Suk-yeol has raised the tax threshold for local crypto trades but maintains strict oversight on reporting of overseas holdings.
- Tightening regulations lead to mandatory data sharing between international exchanges
- Failing to report large wallet balances could result in criminal charges
- Tax threshold for domestic crypto trades raised to approximately $41,000
Hot Take: Stay Compliant to Avoid Tax Troubles in South Korea
Crypto traders in South Korea must take heed of the new tax regulations and ensure the proper declaration of overseas assets to avoid hefty fines or potential legal consequences. With increasing cooperation between global tax authorities, compliance is crucial to maintaining a secure and legal trading environment.
Sources:
– Money S
– The Korea Times Twitter
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