South Korea slapped the country’s largest cryptocurrency exchange Bithumb Korea with a tax bill of 80.3 billion won ($69.3 million), marking the government’s first taxation on cryptocurrency trading.
In a regulatory filing on Friday, Vidente Co., Bithumb’s largest shareholder, confirmed the tax claim from the National Tax Service (NTS) but said the final payment may be subject to change as Bithumb Korea is planning to take legal actions.
The NTS in January 2018 had concluded that Bithumb failed to fulfill its duty of withholding taxes of its foreign customers. Withholding tax refers to income tax paid by the payer of the income rather than the recipient, with the tax typically withheld or deducted from the income in advance.
Under local tax laws, the income payer is required to withhold taxes on any income incurred by foreign residents from selling assets in Korea. To tax Bithumb, the NTS categorized cryptocurrency trading of foreigners as miscellaneous income, recognizing capital gains from crypto trading as “assets.”
The move comes before the country’s legal reforms to tax cryptocurrency gains are to be made next year.
Experts say authorities may have accelerated the move as the taxable period expires after five years from the time the income is earned.
By Lee Sae-ha and Kim Hyo-jin
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]