Some recent news on South Korea and implementing taxes on cryptocurrencies that go through. Commentary by professor of taxation. Read now.
South Korea’s National Tax Service withholds taxes worth around 70 million or 80.3 billion dollars from the crypto exchange Bithumb.
According to a CoinDesk report, the biggest shareholder of Bithumb Holdings confirmed a withheld amount and said the taxes will be held for their foreign customers. Although this is not likely to happen.
The report also stated that the taxation agency called tax upon fundings from crypto transactions.
A report by the Korea JoonAng Daily states:
“Bithumb Korea is planning to take legal action against the tax claim so the final payment can be adjusted in the future.”
The Korea Daily said that the calculated tax is based on some irregular income such as lottery gains. The tax is collected at a 22% rate that is based on foreign withdrawals.
The consequences for the crypto exchange’s clients are not quite clear, as there are no comments by Bithumb at the moment.
While the tax office first target is foreign customers who trade cryptos on Bithumb but since withholding tax is paid to the government by Bithumb, and not the customers.
A University of Seoul professor of taxation, Kim Woo-cheol, commented:
“Bithumb can pay 80.3 billion won and [theoretically] afterwards collect the amount from its foreign clients, but practically it’s impossible.”
Anonymous sources stated that even though foreigners are banned from opening accounts on cryptocurrency exchanges, they still used the country’s trading platforms.
The source elaborated:
“So were transactions using fake names. Even for the exchanges, it’s difficult to know who the investors actually are and how much their trading profits are. It’s questionable what the taxation was based on.”
There are no clear rules about putting taxes on crypto transactions in the country.
The country’s Ministry of Economy and Finance said to put regulations for crypto taxes in 2020 and as from 2018, South Korea banned anonymous cryptocurrency trading and said transactions to be registered with the Financial Services Commission. If someone fails to do it, they would get sent to prison for 5 years.
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