Korea’s top cryptocurrency exchange Bithumb has filed an official complaint against the National Tax Service (NTS) for slapping it with a massive tax bill of sixty-nine million US dollars ($69 million), The Korea Times reported today.
For this popular cryptocurrency exchange, with one of the most substantial trading volumes, the year 2019 didn’t end on a good note for the country’s tax organization, NTS, decided to withhold tax from overseas customers of Bithumb. It classified Bithumb’s foreign trading income as “miscellaneous income” and thus recognized the capital gains as assets.
It was the first time that the Korean government ever decided to impose a tax on cryptocurrency transactions. While NTS’ defence is simple – whenever there is income involved, there is a tax as well, the troubled cryptocurrency exchange has opted to put up a fight.
NTS has no ground to impose tax, cryptocurrency exchange Bithumb.
In a complaint registered at the Tax Tribunal, Bithumb claims that the grounds on which NTS levied the massive tax bill is absolutely baseless. According to the firm, the fact that cryptocurrencies aren’t officially recognized and regulated by the government makes them immune to taxes of any kind, thus demanding them to cancel the withholding tax.
For the guidance, withholding tax refers to a retention tax form which the income payer pays to the government as income tax, instead of the income receiver. This required Bithumb to pay the entire levied amount to the NTS first before settling the remaining fees with its customers.
According to the defence presented by a Bithumb spokesperson, the trading platform settled all the charges and been preparing to clear its stance in the court ever since.
Following the announcement made by Bithumb, Choi Hwoa-in, an advisor to the Financial Supervisory Service, Korea’s regulator of financial institutions, commented on Bithumb’s strategic and calculated move. Because Bithumb is moving to court after settling the full amount suggests that the exchange is, in fact, looking to win back partial or full tax amount, she said.
According to her, the country’s existing laws do not categorize Bitcoin as an asset, and that is enough defence to prove that NTS cannot impose this tax. The Ministry of Economy and Finance is yet to issue a firm decision on the matter, and thus NTS pressurizing the firm to pay the tax amount is uncalled for, Choi asserted.
Meanwhile, despite all the setbacks with NTS, Bithumb is focussing on the positives. It kicked off this year by announcing a massive eight million US dollars ($8 million) investment in South Korea’s blockchain development zone.