South Korea has made a decision to join the Crypto-Asset Reporting Framework (CARF) of the OECD. It will facilitate a global crypto trade tax cooperation system. Domestic exchanges such as Upbit and Bithumb will be obligated to submit information regarding overseas investors from 2025. It will be both transaction and personal information that will be sent to partner country tax authorities.
Although the data exchange process begins officially in 2027, collection of records will be made from next year. It ensures that no activity in the preparatory process goes without monitoring. It is fortified by the Virtual Asset Information Exchange Agreement that operates to prevent tax evasion through unchecked crypto transfers.
Crypto overseas transactions of Korean residents
Overseas crypto traders who are Koreans will be monitored even further. Their files will be submitted to the National Tax Service (NTS). Presently, Koreans who possess overseas assets like crypto valued at over KRW 500 million need to report these voluntarily. This already includes deposits and securities accounts.
Overseas virtual assets this year totaled KRW 11.1 trillion, a growth of KRW 700 billion compared to last year, reported the NTS. With CARF, reporting will cease to be dependent on account value thresholds. Instead, all overseas crypto transactions will be reported automatically to the NTS through international cooperation. This change will tend to boost monitoring while improving financial transparency.
Taxation and international cooperation
Although South Korea has deferred taxing domestic crypto investment incomes until 2027, a few other countries such as the United States and Germany already tax such holdings. It was emphasized that crossborder information sharing is an international treaty function and not a component of a nation’s domestic taxing policy.
Through joining CARF, South Korea declares an intention to harmonize internationally with global tax standards. It is aimed at preventing the flight of capitals through crypto and closing gaps in cross-border tax collection. Both local and global investors will then be liable to stricter global scrutiny.
