▲ Jung Cheol-woo, head of the Taxation and Legal Affairs Bureau of the National Tax Service, said on the 15th that he secured 36.6 billion won in cash and bonds for 2416 high-payers who concealed their assets using virtual assets such as bitcoin at the government’s Sejong Office. (Newsis)
The government plans to impose reporting obligations to overseas cryptocurrency holders from next year to prevent evacuation and eliminate taxation blind spots. Violation of reporting obligations will result in up to 20% fines and criminal prosecution.
According to the National Tax Service on the 16th, due to the revision of the’International Tax Adjustment Act’ at the end of last year, overseas virtual assets will be added to the obligation to report overseas financial accounts from next year, and the holder will be obligated to report it.
This measure is due to concerns about the taxation of virtual asset income (other income) next year, but foreign exchanges will also become taxable blind spots.
Earlier, the National Tax Service secured 36.6 billion won in cash and bonds for 2416 people who recently concealed their assets using virtual assets such as bitcoin. However, all of these virtual assets are virtual currencies handled by domestic exchanges, and foreign exchange users are excluded.
Accordingly, from next year, domestic residents or domestic corporations whose total balance of overseas financial accounts, including virtual assets using overseas exchanges, exceeds KRW 500 million at any one day of the end of each month, must report to the competent tax office in June of the following year.
As virtual assets held by foreign exchanges or in private transactions are mostly dependent on taxpayers’ reporting, severe sanctions are imposed on those violating the reporting obligations, and the informant reward system is also operated.
Violation of the obligation to report overseas financial accounts is subject to a penalty of up to 20% of the unreported or underreported amount, and if the unreported amount exceeds 5 billion won, it is subject to criminal prosecution and list disclosure review.
Informants who provide important information to detect violations of the obligation to report overseas financial accounts will receive a reward of 5 to 15% of the penalty or fine, up to a limit of 2 billion won.
An official from the National Tax Service said, “It is difficult for the government to identify virtual assets that use overseas exchanges, and even if they do find out, there is a limit to compulsory collection such as seizure.”