The government is pushing for measures to strengthen the monitoring standards for foreign exchange transactions exceeding $10,000 per year. This is expected to put a brake on tax evasion practices such as YouTubers who do not properly report income even after receiving money from abroad.
On the 21st, an official from the National Tax Service said, “We plan to start consultations with the Ministry of Strategy and Finance sometime soon over a plan to lower the foreign exchange transaction standard notified to the National Tax Service from ‘above US$ 10,000 per year’.”
According to the current foreign exchange transaction regulations, when a person receives more than $10,000 in foreign money in one year (cumulative basis), the Bank of Korea must collect foreign exchange receipt data and notify the National Tax Service. The National Tax Service uses this data for tax return guidance and tax investigations.
The reason the government is making moves to strengthen the standards for notification of foreign exchange receipts is that it can be a powerful weapon in the detection of tax evaders. As the income evasion of YouTubers became a social problem, the Ministry of Strategy and Finance greatly strengthened the 2019 foreign exchange receipt data standard from ‘above $10,000 per year’ to ‘above $1,000 per year’. However, this is a temporary measure applied only to transactions between January and December 2019, and since last year, the standard for notification of foreign exchange receipts has returned to over $10,000 per year.
The National Tax Service collected transaction data in 2019 and built a foreign exchange database (DB) last year to analyze it, and it is said that it was effective in catching tax evaders and YouTubers. Accordingly, there is a reaction that the National Tax Service should significantly lower the threshold for exceeding $10,000 per year. There is also an opinion that it is worth taking out the standards implemented in 2019 and reviewing them again.
An official from the National Tax Service said, “There is a need to formalize the strengthening of standards for foreign exchange receipt data, which was only a temporary measure.” In response, an official from the Ministry of Strategy and Finance said, “If the National Tax Service receives a request for consultation, we will comprehensively determine whether to adjust the standard amount of foreign exchange receipt data in line with the purpose of the Foreign Exchange Transactions Act, such as stabilizing the foreign exchange market.”
As long as YouTubers have more than 1,000 subscribers and more than 4,000 hours of playing time per year, they can make money by posting advertisements, and the revenue is distributed from Google’s Singapore corporation overseas according to the number of views and interim advertising fees.
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