Intro: The National Tax Service from South Korea has announced that the accounts at foreign cryptocurrency exchanges will become subject to overseas financial account reporting from next year in January.
The South Koreans will now have to do a mandatory reporting of their foreign cryptocurrency exchanges, come next January 2022.
The National Tax Service (NTS) from South Korea on June 3 has announced that the accounts at foreign cryptocurrency exchanges would become subject to overseas financial account reporting from January 1, 2022. This mandatory accounting is necessary for the South Korean residents and corporate bodies.
As per the new law, the reporting of the account must be done in the corresponding year. With a total of 500 million won balance exceeds in the overseas account on the last day of any month, then it is liable for them to report to the authorities in June of the following year.
Currently, all financial products like deposits, savings, stocks, bonds to funds, derivatives and insurance, all should be reported mandatorily. Also, cryptocurrency exchange accounts will also be added from next year.
Who are exempted from reporting
People who have less than 500 million won earnings are not liable to the mandatory reporting obligations. However, they have to pay the taxes on any earned income from transactions, as per the officials from NTS.
Next is the individual investor who buys and sells overseas stocks via domestic securities accounts is not required to mandatory reporting.
Fine for non-reporters
The last day for the submission of this year’s reporting is June 30. If anyone fails to submit the reporting, he will be liable for a fine of 10% to 20% of the reported amount. Any type of violation of more than five billion won is liable for criminal punishment.
According to the financial data exchange of several governments, the uncovered violation is on the rise. The number of violations last year registered was 47.4 billion won. There were in total 68 violators reported. All in all, a total of 2,685 reports were recorded which amounts to 59.9 trillion won last year.
The background
Trading in cryptocurrency in South Korea became very popular and increased towards the end of 2020. Investors’ performance was marked outstanding in a few key markets.
In the same year, the National Assembly legalized cryptocurrencies and crypto exchanges and paved the way for the regulation. This was done due to the rise in the trading of the cryptocurrency even in the midst of the Covid19 pandemic. The legislation was formed to oversee an emerging industry and develop rules around anti-money laundering and frauds.
As per the Korean study in Quartz, in 2017, one-third of the South Koreans were investing in cryptocurrencies like Bitcoin and Ethereum. In 2018, the government introduced its cryptocurrency, the S-coin. The legislation passed in 2020 was an attempt to dampen enthusiasm in the markets, shut down the spread of blockchain and control the bitcoin prices fluctuations and other cryptocurrencies.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.