Overseas Virtual Assets Avoiding 'Forced Collection' Also Subject to Reporting Obligations Starting Next Year

[Sejong=Asia Economy Reporter Kim Hyunjung] As the National Tax Service recently took its first enforcement action to seize virtual assets of delinquent taxpayers, users of overseas exchanges were excluded from this measure. The government plans to mandate reporting of overseas virtual assets from next year to prevent them from being used as means of tax evasion.

According to the National Tax Service on the 16th, holders of overseas virtual assets will have a reporting obligation starting next year. This follows the amendment of the 'International Tax Adjustment Act' at the end of last year, which added overseas virtual assets to the reporting obligations for overseas financial accounts.

From next year, domestic residents or domestic corporations whose total balance of overseas financial accounts, including virtual assets held through overseas exchanges, exceeds 500 million KRW on any day at the end of any month during the year, must report to the competent tax office by June of the following year. Since virtual assets held through overseas exchanges or peer-to-peer transactions rely on taxpayer reporting information, sanctions will be imposed on those who violate the reporting obligation, and a reward system will be operated for whistleblowers.

Violating the overseas financial account reporting obligation will result in a fine of up to 20% of the unreported or underreported amount. If the unreported amount exceeds 5 billion KRW, criminal prosecution and public disclosure of the list will be considered. Whistleblowers who provide important information leading to the detection of violations of the overseas financial account reporting obligation will receive rewards equivalent to 5-15% of the fines or penalties, up to a maximum of 2 billion KRW.

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