South Korea’s National Tax Service has reported that citizens and organizations have declared overseas cryptocurrency assets worth a staggering 131 trillion won (US$98.4 billion) for taxation in 2023, following the implementation of mandatory reporting requirements earlier this year.
This dramatic surge in declared cryptocurrency assets, which includes digital currencies like Bitcoin and Ethereum held in foreign accounts, comes as part of South Korea’s efforts to regulate and tax the burgeoning cryptocurrency market within the country. The figures were disclosed based on 1,432 tax declarations submitted by both individual investors and organizations.
131 tln won worth of overseas crypto assets reported to tax agency https://t.co/bXsWEgIPpT
— Yonhap News Agency (@YonhapNews) September 20, 2023
According to the National Tax Service, the total value of declared overseas assets, encompassing not only cryptocurrencies but also cash and securities, has skyrocketed to 186.4 trillion won (US$140.7 billion). This remarkable increase is in stark contrast to the previous year’s total of 64 trillion won (US$48.3 billion), underscoring the impact of the new regulations.
The surge in declarations showcases the government’s success in encouraging individuals and entities to be more transparent about their overseas financial holdings. Failure to report these assets can result in fines of up to 20 percent of the undeclared funds, as stipulated under South Korea’s tax laws.
The National Tax Service revealed that 1,432 individuals and organizations complied with the reporting requirement. While the exact geographical distribution of cryptocurrency holdings is challenging to ascertain due to the nature of digital assets, the United States emerged as the leading destination for overseas accounts held by South Korean entities. Japan and Britain followed closely behind.
For individual investors, the United States also claimed the top spot, with Singapore and Hong Kong taking second and third place, respectively. This reflects the global nature of cryptocurrency investments, as investors diversify their portfolios across various international jurisdictions.
It’s important to note that tracking the precise location of cryptocurrency assets on exchange platforms remains a challenging task, and this data was not included in the geographical breakdown. However, the tax authorities’ efforts to encourage transparency in overseas holdings represent a significant step toward ensuring compliance with tax regulations.
In accordance with South Korea’s tax laws, any South Korean national possessing more than 500 million won (US$378,000) in foreign financial accounts, regardless of the type of assets, is required to report them to the authorities in June. Failing to do so can result in substantial fines.
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