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The Korean National Assembly passed a proposal by the Ministry of Economy & Finance and the Ministry of Interior & Safety related to Taxation of Businesses and Individuals in December of 2020. The Amendments shall take effect in 2021. The following is a summary of the major amendments to Korea’s Tax Code and regulations related to individuals in 2021. For an article on Taxation for Corporations please see: Korean Corporate Tax Law Amendments for 2021.
1. Amendment to Administrative Fines under the International Tax Coordination Law of Korea
Administrative Fines for the failure to report foreign financial accounts is capped at KRW 2 billion under an amendment to the Presidential Decree to Korea’s International Tax Coordination Law. Additionally, a reduction in the maximum fine is available to all who reported foreign bank deposits under the Foreign Exchange Transactions Act. This maximum fine applies to administrative fines imposed after February 16, 2021.
2. Report of Crypto Currency Assets under Revised Korean Tax Law
Amendments to Korean Tax Law, as of 2021, mandates that all crypto assets held by residents of Korea must be reported on tax returns. With the increased oversight of Crypto Exchanges and the impending regulation of Crypto Exchanges and Crypto Transactions, we suspect to see strict enforcement of this reporting requirement. For more articles on the taxation of crypto currency in Korea, please see: Taxation of Crypto Currencies in Korea.
3. Amendment to Submission Deadlines for Comprehensive Income Tax Returns
Article 134 of Presidential Decree of Korea’s Individual Income Tax Law was amended to allow for the late submission (deemed timely submitted – in some cases) of a comprehensive income tax return even if no payment of the tax owed is paid at the time of filing. Prior to this amendment, a taxpayer would need to file the tax return and make payment at the time of filing of the return.
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