Overseas Financial Account Reporters Increase by 24%... Amount Decreases by 2.6%

National Tax Service to Audit 2,685 Filers and 59.9 Trillion Won This Year
Focused Verification on Non-Filers and Suspected Overseas Income Evasion Cases

[Asia Economy Reporter Kwangho Lee] According to the results of the overseas financial account reporting conducted in June this year, a total of 2,685 people reported 59.9 trillion KRW.

On the 10th, the National Tax Service (NTS) announced that compared to the previous year, the number of reporters increased by 520 (24.0%), while the reported amount decreased by 1.6 trillion KRW (2.6%).

For individuals, a total of 1,889 people reported 7,467 accounts amounting to 8 trillion KRW, showing a 28.6% increase in the number of reporters and a 25% increase in the amount compared to last year. For corporations, a total of 796 corporations reported 11,099 accounts amounting to 51.9 trillion KRW, with the number of corporations increasing by 14.4% and the amount decreasing by 5.8% compared to the previous year.

The significant increase in reporters this year is due to the lowering of the reporting threshold from 1 billion KRW to 500 million KRW starting last year. In the lowered reporting threshold range between 500 million and 1 billion KRW, 969 people reported 3,136 accounts totaling 681.9 billion KRW, of which individuals accounted for 794 people (562.8 billion KRW), representing 81.9%.

Additionally, the expansion of the system this year to require individual shareholders of foreign corporations that opened overseas financial accounts to report (94 reporters) also contributed. The spread of voluntary reporting awareness due to periodic inspections and system promotion by the NTS regarding non-reporters also played a role.

On the other hand, the decrease in the reported amount is due to contingent factors such as a decline in overseas deposit account reporting related to specific countries caused by reduced returns on overseas financial products, and the disposal of overseas stocks by some high-value reporters. In fact, the issuance volume of securitized bonds based on fixed deposits from Chinese and Middle Eastern banks decreased by about 47% compared to the same period last year, leading to a decline in related deposit account reporting amounts.

The average reported amount per individual was 4.2 billion KRW, and the average reported amount per corporation was 65.2 billion KRW.

By account type, the reported amount for deposit and savings accounts was 29.2 trillion KRW (48.8%), the largest portion of the total amount, followed by stock accounts at 25 trillion KRW (41.7%), and accounts for derivatives, bonds, insurance, etc. at 5.7 trillion KRW (9.5%).

By country distribution for individuals, based on the number of people, the order was the United States, China, Hong Kong, Singapore, and Canada, while by amount, it was the United States, Japan, Singapore, Hong Kong, and China.

For corporations, based on the number of entities, China (1,608) was the highest, followed by Vietnam and the United States. By amount, the order was Japan (15.3 trillion KRW), China, Hong Kong, the United States, and the United Arab Emirates (UAE).

Since the first overseas financial account reporting in 2011, the NTS has imposed fines totaling 112.5 billion KRW on 382 non-reporters.

From 2014, when criminal penalties were applied, through the first half of this year, 58 people have been prosecuted. Additionally, since the name disclosure system was first implemented in 2013, the names of 7 individuals have been publicly disclosed.

The NTS plans to conduct post-inspections on suspected underreporters or non-reporters using financial information exchange data with foreign tax authorities, foreign exchange transaction data, and data held by other agencies. In particular, this year, they intend to focus on verifying those suspected of evading related foreign income while not reporting overseas financial accounts.

Last year, under the automatic exchange of financial information agreement, Korea exchanged financial information with a total of 95 countries including Switzerland, Singapore, and the Cayman Islands, and this year, with the addition of Turkey, it plans to exchange information with 108 countries.

An NTS official stated, "We will thoroughly verify suspected non-reporters through expanded international information sharing and strengthened internal information collection capabilities, and strictly take measures such as imposing fines and criminal prosecution upon confirmation of non-reporting. We will also continuously promote system improvements to enhance the effectiveness of the overseas financial account reporting system, striving to increase transparency of offshore tax bases through this system."

This content was produced with the assistance of AI translation services.