Upbit Restricts the Withdrawal of Foreign Customers… This Is a Subtle Agreement with Bithumb’s Taxation Notice of 80.3 Billion Won

Bithumb was notified of taxation in June of last year and claimed for the review of legality, but the National Tax Service did not respond

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The National Tax Service (NTS) has imposed a tax of 80.3 billion won on the cryptocurrency exchange Bithumb in relation to withholding of foreign customers’ income taxes. In the meanwhile, the cryptocurrency exchange Upbit is known to restrict the withdrawal of accounts that are supposed to be owned by foreigners.

To sum up with the whole coverage of Coindesk Korea on the 30th, Upbit has begun the KYC (Know Your Customer) process after blocking the withdrawal of accounts assumed to be owned by foreigners. An Upbit official explained in an interview with Coindesk Korea, saying, “We are preventing the withdrawal of the KRW in all foreigners’ accounts and lifting the withdrawal restrictions as soon as the identity is verified. However, they did not respond to specific details such as why the withdrawal restriction was applied, how the ID verification is being done, and who was to be released from the restriction.

The Upbit’s action is unprecedented in that it was taken without prior notice. Upbit has revealed the background and detailed information through announcements about suspension of deposit and withdrawal that have been taken so far, including damage caused by hacking attack at the end of November last year. At the time of publication, however, there is no explanation from Upbit about the withdrawal restriction of the accounts assumed to be owned by foreigners.

However, since the related measure is subtly coincident in many ways with Bithumb’s taxation notice, the timing, and the subjects, some people argue that Upbit has been taxed similarly to Bithumb. Bithumb said in their public announcement on the 27th that they were imposed income taxes of 80.3 billion won by the NTS on November 25 last year regarding the amount of withdrawal of ‘foreign users’ (non-domestic residents). Upbit may also be notified of taxation at the same time, and they may have actually carried out inspection to check whether the foreign users are foreigners subject to tax laws that do not stay longer than 183 days in Korea. An Upbit official explained, “This KYC process is not related to Bithumb’s withholding of income taxes.” On the other hand, when we asked if they received a notice of taxation from the NTS, he said, “I can’t confirm it.”

Bithumb Korea added a comment entitled ‘Request for the review of legality before taxation’ in the amended declaration of the 2018 audit report published in Data Analysis, Retrieval and Transfer System (DART). The review of legality before taxation is a system that allows taxpayers to object to the content and amount of taxes notified by taxation authorities. Bithumb Korea said in an additional comment that they received a notice of taxation and then claimed for the review of legality but did not get a notice of determination.

There is no specific timeline in the comments added, but according to Coindesk Korea, Bithumb received a notice of taxation from the NTS in June 2018 and immediately claimed for the review of legality. In principle, the NTS must give a response to review of legality within 30 days, but the NTS has not respond for a year and a half, and then informed that they would not accept the review of legality and they would make an official notification of taxation. The Ministry of Economy and Finance, superior authorities of the NTS, believes that it is not possible to impose income taxes on cryptocurrency trading profits, and thus the attention is drawn to the background of the NTS’s imposition of income taxes.

Kim Dong-hwan(2019.12.31) 업비트 외국인 출금 차단…빗썸 803억 세금과 미묘한 일치
retrieved from http://www.hani.co.kr/arti/economy/it/922673.html#csidxe7d1fe99651617d83cdfda7e4c5971b

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