Banks with information about credit card users who spend over US$10,000 abroad in a year must report it to the National Tax Service and the Korea Customs Service from the end of this month.
The Ministry of Strategy and Finance on Sunday announced the amended regulations on foreign currency transactions will go into effect on April 30 to reinforce monitoring offshore tax evasion. "We strengthened relevant regulations at the recommendation of the National Assembly," a ministry spokesman said. "As the number of overseas travelers and amount they spend on overseas shopping have soared, the possibility for offshore tax evasion is greater than ever."
Under the current law, banks are required to report to the National Tax Service only when annual transactions are over $50,000, and to the Korea Customs Service when the amount is over $20,000 a year.
According to the Bank of Korea, credit card holders spent a record $8.6 billion overseas last year. A total of 18.36 million cards were used and an average of US$496 was spent on each card.
Under the new regulations, banks must report to the National Tax Service when a customer wires over $10,000 a year to savings accounts overseas, down from $50,000. They will also need to report to the tax authority if Koreans have overseas savings accounts above a certain amount -- $500,000 for a corporate body and US$100,000 for an individual.