Controversy over Income Taxes on Cryptocurrency…“National Tax Service Notifies Bithumb Taxation of 80 Billion won”

'Bithumb should pay crypto income taxes for foreigners who have not withheld’ Taxation object·Tax withholding obligation is in dispute

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(SEOUL=Yonhap) Reporter Shin Ho-kyung, Ku Jung-mo = Bithumb, a cryptocurrency exchange, was notified of taxation of 80 billion won by National Tax Service.

However, if you look at the details, it is expected that the issue is whether or not the cryptocurrency is taxable as it imposed taxes on cryptocurrency traders.

According to crypto industry, Vidente[121800] said, “We confirmed that Bithumb Korea will be levied taxes equivalent to 80.3 billion won (including local taxes) related to withholding of income taxes of foreign customers on the 25th of last month” in a recent public announcement.

The existing law requires that non-residents, such as foreigners, have to withhold income from those who pay income, such as a company, to report and pay the income on behalf of income earners.

Shortly, the tax imposition of National Tax Service means that Bithumb should pay income taxes for foreigners because Bithumb has not carried out a role as a withholding agent.

In the normal case, Bithumb can get the taxes from the foreign customers, but in reality, there’s no way to receive it, so it can be regarded as a ‘tax burden’ for Bithumb.

It was reported that National Tax Service charged taxes on foreign clients’ transfer gains from cryptocurrencies as ‘other incomes’. National Tax Service seems to have used the ‘other incomes’ tax item because it is difficult to regard it as ‘business incomes’ by investigating all foreigners who have traded and classifying whether they have traded for business or have traded repeatedly.

Income taxes imposed on cryptocurrencies, regardless of other incomes or business incomes, means that National Tax Service considered them as ‘assets’.

Despite of controversies, National Tax Service appears to have decided taxation because they cannot impose a tax five years after the point of income generation complying with ‘national tax imposition exclusion period’ regulation. It was interpreted that National Tax Service’s notification of taxation is in preparation for taxation of virtual assets as already announced by the government.

In this case, it was taxed on income of foreign customers, but if the virtual assets of domestic customers are also subject to taxation, it is expected to put a heavy burden on the entire cryptocurrency industry including Bithumb.

Bithumb decided to pay their taxes and to find further solutions. A Bithumb personnel said, “There was an official tax imposition, but we plan to vindicate ourselves truly as there is still remedy for violation of private right”.

Shin Hokyung, Koo Jungmo(2019.12.29) “가상화폐 소득세 논란…빗썸 “국세청, 800억원 과세통보”(종합)
Yonhap, retrieved from https://www.yna.co.kr/view/AKR20191229019151002?section=search

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