Crucial: South Korea Mandates Crypto Wages from Abroad for Income Tax Reporting

Key Points

1. The NTS confirmed that crypto wages from foreign entities under incentive contracts require filing a comprehensive income tax return, even if no withholding tax was applied.

2. The ruling is based on key provisions of the Income Tax Act, specifically Articles 127 (Liability for Withholding) and 70 (Final Return on Tax Base of Global Income).

3. South Korean residents earning crypto from abroad must track transactions and convert them to Korean Won (KRW) for tax reporting.

4. South Korea's approach reflects a global trend toward formalizing digital asset tax frameworks, aiming for fair and equitable taxation.

5. The NTS's stance signals a move to integrate cryptocurrency earnings, such as staking rewards or DeFi income, into traditional financial regulations.