Crypto Exchange Bithumb Takes Korean Tax Authority to Court Over $69 Million ‘Groundless’ Tax Bithumb, a major crypto exchange in South Korea, has taken the country’s tax authority to court over a “groundless” tax imposed on the exchange. https://t.co/JVCbBKz2tL #bitcoin — Jeromy Rothen(₿)erg (@CryptoCoach_J) January 17, 2020
Experts explain that currently, there are no grounds to tax crypto transactions in South Korea and existing tax laws do not apply to crypto transactions.
The Korea Times reported:
“The firm claims that cryptocurrency is not a legally recognized currency and therefore the authorities lack the grounds to impose a tax of any kind.”
Likewise, an NTS official was quoted as saying:
“We cannot comment on the ongoing matter. We will await the judgment from the Tax Tribunal.”
The Ministry of Economy and Finance, which oversees the country’s economic policy, recently explained that individual investors’ crypto profits are not taxable in South Korea. However, work is underway to amend the tax code to allow the taxation of cryptocurrency.
Choi Hwoa-in, an adviser to the Financial Supervisory Service, explained that with a growing number of traders profiting handsomely from cryptocurrencies over the past few years, the tax authority has viewed this sector as a new source of taxable income.
Likewise, the publication conveyed:
“Choi suspects that the NTS is putting the issue front and center for public discourse in a clever move seeking to establish grounds to impose tax on what essentially remains tax-free gains.”
It has also been analyzed that to tax Bithumb, the NTS has categorized foreign traders’ crypto gains as miscellaneous income. Earnings from real estate or stock trading are categorized as capital gains in South Korea.
Further, Choi explained:
“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’s opinion on the same matter.”
On the other hand, Ahn Chang-nam, a Tax Professor at Kangnam University, believes that it is “realistically difficult” for the government to know about every crypto transaction.
“It seems like the NTS took a practical approach in categorizing gains from crypto asset trading as miscellaneous assets.”
Thus, Choi concluded:
“Bithumb filing a suit after paying the full amount in that sense is a calculated move expecting partial to [a] full return of the amount paid.”