The National Tax Office will be automatically informed of all U.S. bank accounts held by Korean citizens containing more than US$10,000.
The Ministry of Strategy and Finance and the U.S. Department of Commerce have signed a treaty agreeing to exchange tax-related information starting in 2015.
The U.S. Internal Revenue Service will inform the NTS of accounts in American banks by Korean nationals and how much they contain, and Seoul will do the same for bank accounts here opened by U.S. citizens.
The NTS will be notified of all U.S. bank accounts held by Koreans that accrue at least $10 in annual interest, the minimum interest U.S. banks pay to accounts containing at least $10,000.
Accounts with insurance companies, brokerages and investment trusts also fall under the agreement.
Meanwhile, Seoul will inform Washington of U.S. citizens' accounts in Korea containing at least $50,000.
The NTS currently requires Koreans with overseas accounts containing at least W1 billion (US$1=W1,070) to voluntarily report to the tax authority, but the measure has proved toothless. Last year, only 158 Koreans informed the NTS that they had overseas accounts containing at least W1 billion, which totaled W658.2 billion.
Han Myung-jin at the ministry said, "This is the first treaty with the U.S. involving the automatic exchange of tax-related information and will help us track down people who use overseas accounts to dodge taxes."