Bithumb, the largest cryptocurrency exchange in South Korea, faces a $70 million tax bill from tax authorities. This is according to local media reports published Monday.
A regulatory filing made on Friday by Bithumb’s largest shareholder acknowledged the massive tax bill, local news outlet Pulse reported. The total tax is 80.3 billion won or more than $69.5 million.
The Pulse adds that the tax bill is what Bithumb owes the taxman from withholding tax. As per the National Tax Service (NTS), the exchange earned substantially from its dealings with foreign customers.
The NTS categorizes such earnings from cryptocurrency trading as miscellaneous income. Reportedly, this income attracts capital gains because cryptocurrencies are treated as “assets” and trading them translates to income.
According to Korea Joongang Daily, another local news outlet, the NTS calculated the total tax amount based on this income. The outlet states that the authorities levy a 22 percent tax rate on such earnings, with the taxes annualized.
Bithumb to explore legal action
Bithumb is reportedly considering legal action, Pulse reported. The publication adds that following this move, whatever Bithumb will likely pay to the NTS as a final payment might change.
Another local media site reports that Bithumb’s decision to seek legal action is down to its perception that NTS has erred. According to Business Korea, the popular crypto exchange feels this is harsh given they already pay corporate and local income tax. As such, the tax authority needs not to have hit them with a withholding tax bill.
In June 2018, the NTS released its investigation report that found the exchange not to have committed tax evasion. The investigation covered the period between 2014 and 2017. However, the authority hit Bithumb with a 30 billion won (or about $28 million) tax bill.
Bithumb has yet to comment on this latest development.
Media reports out of South Korea also indicate that other exchanges, including Upbit and CoinOne, are monitoring the developments.
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