South Korea’s financial authorities have issued a stern warning to cryptocurrency holders, urging them to disclose their overseas crypto exchange holdings by June 30 or risk facing prosecution. This move comes as part of the country’s efforts to tighten regulations surrounding digital assets and financial transparency.
Mandatory Reporting Deadline Looms
According to a recent announcement by Daekyung Kim, a tax accountant at Hana Bank Asset Management Group, June 30 has been designated as the deadline for reporting overseas financial holdings. Under the Income Tax Act, South Korean residents with a total balance exceeding 500 million won across all overseas financial accounts must declare these accounts to the authorities.
Penalties for Non-Compliance
Failure to report overseas account holdings can result in severe penalties. Individuals who fail to comply may face fines ranging from 10% to 20% of the account balance. Moreover, those with unreported crypto holdings exceeding 5 billion won could potentially face criminal prosecution.
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Residency Criteria and Reporting Process
The reporting obligation applies to both residents and domestic corporations. Foreigners and overseas Koreans are subject to different residency criteria, based on their duration of stay in the country. Detailed information regarding the highest total month-end balance and currency conversion is required during the reporting process.
South Korea’s National Tax Service (NTS) sends notices to individuals expected to submit overseas financial accounts, drawing data from various sources such as past declarations and international information exchange agreements. However, the absence of a notice does not exempt individuals from their reporting obligations, as the NTS may have obtained account information through cross-border data sharing.
In conclusion, South Korea’s crackdown on undisclosed overseas crypto holdings underscores the government’s commitment to financial transparency and regulatory compliance within the burgeoning cryptocurrency market. Individuals are urged to adhere to reporting requirements to avoid potential legal repercussions.