Major South Korean Cryptocurrency exchange Bithumb has decided to litigate a near $69 million (80 billion won) tax bill levied by the National Tax Service (NTS). According to a report published by a major South Asian daily on Jan. 16, Bithumb filed a complaint with the NTS, suggesting that the imposed tax bill is groundless given that Cryptocurrency is not a legally recognized currency. The South Korean tax tribunal now has to decide whether to grant or dismiss the exchange’s motion within 90 days. NTS imposed a retention tax — an income tax paid to the government by the payer of the income instead of its recipient — which is often withheld or deducted from income in most jurisdictions, according to Asian daily. As a consequence, Bithumb is expected to pay the bill before giving the remaining income to its customers. An exchange official told in a press conference that Bithumb has paid the full amount and the company has been preparing for arguments that will be presented in the court of law. The National Tax services have suggested that the gains that arises from accounts that are been held by foreigners should be taxable and therefore it has the rights to impose tax on these accounts.
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Choi Hwoa-in, an advisor to the Financial Supervisory Services reiterated that Bithumb’s stance that tax laws as it currently stands is not applicable to any Cryptocurrencies as it is not yet considered as an asset. This is message is coming out clear from the top, Ministry of Economy and Finance. NTS is pushing for imposition of the law but it will not be successful especially since it is still awaiting the government’s decision on the same matter. This has been the second time such NTS has asked the government for further clarification and asked for some amendments to be made. According to the South Asian daily, Choi said that the current rift between the NTS and Bithumb is a ploy by the former to tax what was previously tax free gain. She told that as the trading and investment of these digital assets has increased in South Korea regulators have now likely come to view the subsequent gains as a new source of taxable income. The South Korean government is currently working to develop a more robust tax framework for Cryptocurrency. The Ministry of Strategy and Financed has confirmed currently it is not possible to impose tax on Crypto but it intends to levy taxes on virtual assets through the revision of the tax code in the future.
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The nascent nature of digital assets has put many Cryptocurrency investors at odds with tax regulators in their respective jurisdictions, as many agencies have failed to issue sufficient or any guidance regarding tax schemes for Cryptocurrencies. Furthermore, failure to comply with these labyrinthine and murky tax policies can mean heavy fines for crypto investors. American holders who fail to properly report their crypto earnings and investments could face large penalties and even potential criminal investigation.
Source: Coin Telegraph
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