The South Korean government has initiated a practical approach where information on domestic and foreign crypto transactions will be logged and shared with the National Tax Service.
Per a local report on Tuesday, the initiative will share crypto transactions by non-residents on local exchanges such as Upbit and Bithumb, with countries worldwide. Additionally, the transaction history of domestic investors on overseas exchanges will be shared with the tax department.
South Korea Officially Joins OECD’s Crypto Reporting Framework
In November 2023, South Korea joined a group of 48 nations to implement the international reporting framework on digital assets.
Dubbed the Crypto-Asset Reporting Framework (CARF), the structure would facilitate the automatic exchange of tax information on transactions involving crypto in a standardized manner.
The Korean Ministry of Economy and Finance has officially signed an agreement for CARF implementation at the Organization for Economic Cooperation and Development (OECD), the Tuesday report said.
“The purpose is to establish detailed regulations for implementing the Virtual Asset Information Exchange Agreement,” a Ministry official said.
Ministry to Issue Administrative Notice This Month
The Ministry is planning to issue an administrative notice this month, detailing the regulations implementation for the CARF.
Tax authorities, including the UK, Germany, and Japan, are pursuing the framework to prevent offshore tax evasion as well as increase tax transparency through crypto.
With the system, investors can expect a big clampdown on anonymous trading.
Besides, Upbit and Bithumb may face heavy compliance headwinds short term and possible volume dips as privacy-driven users rotate out. This is because, domestic crypto operators are required to report personal information and transaction information of residents of partner countries, effective next year.
Further, each country will upload this information to the OECD system to track the overseas crypto transaction history.
The information sharing system will start in 2027, however, transaction records will begin next year, the report added.
“Virtual asset information sharing is governed by international agreements,” a Ministry official said, adding that “It is a separate matter from taxation.”
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