South Korean taxpayers declare overseas crypto holdings worth $98.5 billion

In a surprising move, South Korean taxpayers have voluntarily reported their overseas cryptocurrency assets worth a staggering $98.5 billion, according to the National Tax Service (NTS). This is the first time that the NTS has collected data on the foreign crypto holdings of its citizens, as part of its efforts to crack down on tax evasion and money laundering.

The NTS said that it received 2,410 reports from individuals and 676 reports from corporations, disclosing their crypto assets held in foreign exchanges, wallets, and other platforms. The total value of the reported assets was 116.7 trillion won ($98.5 billion), which is equivalent to about 8% of the country’s gross domestic product (GDP).

The NTS attributed the high level of compliance to its intensive investigation and audit campaign, which targeted taxpayers who failed to declare their overseas crypto income or assets. The NTS also offered incentives such as reduced penalties and tax exemptions for those who voluntarily reported their crypto holdings by the end of August.

The NTS said that it will verify the accuracy of the reported data and impose taxes accordingly. The tax agency added that it will continue to monitor the overseas crypto activities of its citizens and cooperate with foreign authorities to exchange information and prevent tax evasion.

The NTS’s move comes amid the growing popularity and regulation of cryptocurrencies in South Korea, which is one of the largest crypto markets in the world. The government has recently introduced a 20% capital gains tax on crypto profits exceeding 2.5 million won ($2,100) per year, which will take effect from January 2022. The government has also mandated that all crypto exchanges operating in the country must register with the Financial Services Commission (FSC) and obtain a certification from the Korea Internet and Security Agency (KISA) by September 24, or face closure.

The Korean National Tax Service (NTS) has recently announced its plans to impose taxes on overseas crypto assets held by Korean residents. This move is part of the government’s efforts to regulate the crypto market and prevent tax evasion. The NTS will collect data on crypto transactions from foreign exchanges and platforms and apply a 20% tax on income exceeding 2.5 million won per year. The tax will be effective from January 1, 2024.

This new policy is expected to have a significant impact on the crypto industry, as many Korean investors have been using overseas platforms to trade crypto assets. According to a report by Chainalysis, South Korea ranked third in the world in terms of crypto adoption in 2021, with an estimated 14% of the population owning some form of crypto asset. The report also found that South Korea had the highest share of retail-sized transfers, indicating a high level of individual participation in the market.

Some experts have welcomed the NTS’s decision, arguing that it will bring more transparency and legitimacy to the crypto sector, and encourage responsible investment behavior. They also point out that the tax rate is relatively low compared to other countries, such as the US, where crypto income is taxed at up to 37%. Moreover, they claim that the tax will generate additional revenue for the government, which can be used for social welfare and public services.

However, some critics have raised concerns about the feasibility and fairness of the tax policy. They question how the NTS will be able to access and verify the data from foreign platforms, especially those that do not comply with the Korean regulations or cooperate with the authorities. They also argue that the tax will impose an undue burden on small investors, who may not have sufficient knowledge or resources to file their tax returns. Furthermore, they warn that the tax may drive away investors from the Korean market, and hamper the innovation and growth of the crypto industry.