Korea Fights Untaxed Gold Trade
March 24, 2014 Taxation in South Korea
SEOUL – Korea intends to ease the process of trading gold in the country, in the hopes of putting a stop to the untaxed and undocumented trade of the precious metal.
From March 24th the equity exchange of South Korea, Korea Exchange Inc., will begin trading gold, a move that is expected to raise as much as USD 280 million in extra tax revenues, while actively reducing the occurrence of undocumented gold trades on the black market, and eliminating some commonly used methods of evading taxes and hiding incomes.
All gold purchases through the exchange will face a 10 percent value added tax, if the buyer takes possession of the gold, although the tax obligation will be waived if possession of the gold does not change.
In order to encourage a greater amount of trading to be conducted through the exchange, the standard 3 percent import duty on gold purchases will also be waived until April 2015.
It is currently estimated that at least 70 tons of gold is illicitly traded each year in Korea without being taxed, accounting for nearly half of all the gold traded in the country each year.
According to the national tax authority, gold is commonly used in Korea as a method to facilitate illicit transactions or as a means of hiding undeclared incomes, and establishing an official exchange for the commodity will help reduce the untaxed trade of gold.
Photo by: Giorgio Monteforti