Concerns Over Taxation Gaps in Cash Transactions

With the implementation of digital asset taxation next year, concerns have been raised that cash transactions outside of exchanges may remain a tax loophole. While transaction records through exchanges are submitted to the National Tax Service, it is difficult for authorities to ascertain income from transactions involving unreported currency exchange operators unless they are directly detected. This raises concerns about tax equity. The National Tax Service has instructed virtual asset businesses, including exchanges, to submit transaction statements and summaries starting next year. However, if authorities cannot detect transactions through unreported currency exchange operators, it will be challenging to confirm whether income has been generated. Recently, the Chuncheon District Court sentenced an individual, referred to as A, to one year in prison for violating the Specific Financial Information Act. A is accused of exchanging approximately 3.39 billion KRW worth of USDT for cash in 152 transactions from January to June of this year. The National Assembly is currently pushing for legal amendments regarding unreported operators, but it is still in the review stage. Once taxation begins, it may lead to imbalances among taxpayers due to the difficulty in identifying income from transactions through unreported currency exchange operators.

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