Friday, January 17, 2020

South Korean Crypto Exchange Bithumb Drags National Tax Services to Court to Nullify $69 million Tax

Bithumb, the largest South Korean cryptocurrency exchange, has dragged the National Tax Services (NTS) to court to remove the hefty 69.1 million tax imposed on the exchange by the South Korean tax authority.

According to a publication of The Korea Times, Bithumb has filed a complaint with the South Korean Tax Tribunal against the National Tax Service (NTS) saying that a “groundless” tax has imposed on it by the authority.

The news about South Korean tax authorities imposing a withholding tax of 80 billion won (over $68.9 million) on the country’s largest crypto exchange Bithumb came at the end of last year. According to the reports at that time, NTS categorized the exchange’s cryptocurrency trading of foreigners as miscellaneous income, recognizing capital gains from crypto trading as assets.

The exchange, in the complaint, said that cryptocurrencies are not fully recognized as legal currencies in the country and authorities had no reasons to impose a tax of any kind. But the taxation authority claims that gains withdrawn in Korean won from accounts held by foreigners are taxable income.

The report cites a Bithumb official who said:

We paid the full amount and have since been preparing for arguments. We believe we will be given a chance to clarify our stance in court.”

The experts from blockchain and crypto industry also criticize NTS for imposing tax cryptocurrencies-related business. They are suspecting that “the NTS is putting the issue front and centre for public discourse in a clever move seeking to establish grounds to impose tax on what essentially remains tax-free gains.”

Choi Hwoa-in, an adviser to Financial Supervisory Service said that a lot of money that people made via crypto trading in past few years, was enough for taxation authorities to consider the trading and subsequent gains new source of taxable income.

She, about Bithumb and NTS’ case, commented:

Bitcoin under the current law is not an asset. It is clear and simple. The Ministry of Economy and Finance already made that clear. The NTS pushing ahead with the tax imposition is baseless and groundless, especially since it is still awaiting the ministry opinion on the same matter it sought again.”

She added:

Bithumb filing a suit after paying the full amount in that sense is a calculated move expecting partial to full return of the amount paid.”

The authority did not made any comment and said that they would wait for the decision form the tax tribunal.

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