South Korea to Tax Crypto Assets Held in Overseas Exchanges Starting Next Year
Korea's Financial Services Commission is also meeting with crypto exchanges to hear their concerns about new regulation approaches.
South Koreans will have to start paying taxes on their crypto assets held in overseas exchanges from next year.
According to the new rules that apply from Jan. 1, 2022, with tax reporting required from June 2023, taxes will be paid on total balances held with foreign virtual-asset businesses exceeding 500 million won ($450,000) at the end of each month.
Violation of the rules will mean a fine of 10% to 20% on the amount under-reported or not reported.
The under-reported amount surpassing 5 billion won, about $4.5 million, could also result in criminal punishment, reported Forkast, citing an announcement by South Korea’s National Tax Service.
South Korea has been working on levying taxation on cryptocurrency transactions for some time now. In April, Finance Minister Hong Nam-Ki had said that taxation on gains from crypto trading is inevitable.
Crypto businesses in the country also have until September to register as virtual asset service providers with the financial regulator.
DooWanNam, Co-founder of StableNode, who is also working with the original DeFi project MakerDAO also noted that Korea's Financial Services Commission is meeting with several cryptocurrency exchanges to listen to their concerns on the new regulation approaches.
Biggest Korean exchanges like Upbit, Bithumb, Coinone, and many others have obtained ISMS certification (Information Security Management System).
This, according to DooWanNam, could be a “prologue to massive closing of Korean exchanges,” however, it would be targeting small and medium-sized “low-quality” Korean exchanges, hence affecting only low-quality local coins.