This year saw 4,957 declarations filed for overseas financial accounts amounting to KRW 64.9 trillion (∼USD 56 billion). The number of declarations was down 8.5% from last year’s 5,419, representing a 65.2% decrease in the declared amount of KRW 186.4 trillion (∼USD 161 billion).
Decline in Reported Overseas Financial Assets
The sharp drop in both the number of declarations and the declared amount is largely attributed to the diminished reporting of overseas virtual asset accounts due to a depreciation in the value of virtual assets. Nevertheless, compared to the 525 people who reported KRW 11.5 trillion (∼USD 9.93 billion) since the establishment of the overseas account declaration system in 2011, this year’s declarations increased by 844% (4,432 people) and 464% (KRW 53.4 trillion or ∼USD 46 billion) respectively.
Individual vs Corporate Declarations
Individual declarations amounted to KRW 16.4 trillion (∼USD 14.16 billion) filed by 4,152 persons, marking a decrease of 413 individuals (9.0% YoY) and KRW 7.9 trillion (∼USD 6.82 billion) (32.5% YoY).
In comparison, 805 corporations reported a sum of KRW 48.5 trillion (∼USD 41.85 billion), a decrease of 49 corporations (5.7% YoY) and KRW 113.6 trillion (∼USD 98.02 billion) (70.1% YoY) from last year.
Penalties for Misdeclareations
The National Tax Service (NTS) has rigorously enforced penalties including fines, criminal charges, and public disclosure against those who fail to comply with the obligatory reporting of their overseas financial financial accounts.
The NTS nabbed 711 violators of overseas financial account declarations by the end of December 2023, levying a total fine of KRW 240.8 billion (∼USD 207.94 million). Furthermore, a penalty or imprisonment up to two years or a fine ranging from 13% to 20% of the violation amount is imposed on people or corporations failing to report accounts exceeding KRW 50 billion (∼USD 43.21 million).
Future Plans for Tax Accountability
The NTS will continue its crackdown on violators of overaseas financial account declarations, enforcing sanctions such as fines, penalty propositions, criminal charges, public disclosure, and related tax collection measures strictly. Notably, it advised potential violators to take advantage of the up to 90% fine reduction allowed for those declaring after the due date or modifying their declarations.
The NTS has urged taxpayers to promptly modify or declare after the due date for their overseas virtual asset accounts in preparation for information exchanges about digital asset transaction history, which tax authorities worldwide are planning to introduce under the Crypto Asset Reporting Framework.
Disclaimer : This content is a translation of material originally published in Korean by the National Tax Service of the Republic of Korea. While efforts have been made to ensure accuracy, this translation is provided for informational purposes only and does not carry legal weight. In the event of any discrepancy, the original Korean version shall prevail. Users should consult the official Korean documents for precise interpretation. This translation does not constitute legal advice. The translators and publishers shall not be held liable for any loss arising from reliance on this translation.