South Korean-based exchange Bithumb is fighting against a $69 million tax bill. Bithumb tax obligation dispute has now been taken to the tribunal where they will decide whether to grant or dismiss the exchange’s motion within 90 days.
16 January, 2020 | AtoZ Markets – Korean exchange Bithumb has filed a complaint with the Tax Tribunal against the National Tax Service (NTS) order to pay $69 million in withheld tax. The exchange also stresses that the withholding taxation was imposed based on “groundless” rules. The company claims that cryptocurrency is not a legally recognized currency. Hence, the authorities lack the grounds to impose a tax of any kind.
Bithumb Tax Obligation Dispute Taken to Tax Tribunal
A withholding tax is an income tax paid to the government by the payer of the income rather than by its recipient. Primarily applied to employee’s income, the tax is withheld or deducted from income in most jurisdictions in Korea. Bithumb is required to pay the amount imposed by the NTS before paying the remaining income to its customers. A Bithumb official said:
“We have paid the full amount and have been preparing for the arguments since then. We believe we will allow to clarify our position in court”.
The NTS claims (withdrawn in Korean won from accounts held by foreigners) are taxable income. The crypto exchange is seeking to cancel the 80.3 billion won ($69.1 million) withholding tax that the NTS imposed last November. The Tax Tribunal will have 90 days to decide whether to grant or reject Bithumb’s motion.
Confusion Around Crypto Taxation in South Korean
Meanwhile, various departments in the South Korean government are looking at crypto taxation differently. While one ministry was pushing to impose capital gains tax on crypto earnings, another ministry officially notified that profits from crypto cannot be taxed under current laws. Choi Hwoa-in, an adviser to Financial Supervisory Service, said:
“Bitcoin under current law is not an asset.” It’s clear and simple. The Ministry of Economy and Finance has already clarified it. The NTS that pushes forward with the taxation is groundless and baseless. Above all, it is still awaiting the opinion of the ministry on the same issue that sought again”.
An increasing number of people have made a lot of money through crypto trading in the past few years. However, in her opinion, it has been enough for tax authorities to view trading and subsequent earnings as a new source of taxable income. She said:
“Bithumb has filed a suit after paying the full amount in this regard. It is a calculated move that expects a partial or total return of the amount paid.”
The controversy coincides with ongoing efforts to impose taxes on the new form of digital currency. However, it has long criticized for its use as a means of speculation among seekers of unexpected short-term gains. It is worthy of note that Bithumb won the lawsuit against an investor who claimed that hackers stole $350000 from his account because of the negligence of the firm.
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