[Shock] Bithumb South Korea’s largest cryptocurrency exchange faces $68.9M taxation
Bithumb, South Korea’s largest cryptocurrency exchange managed by Bithumb Holdings, is looking to tackle administrative litigation over a $68.9 million (80 billion won) withholding tax bill. On Dec. 29, South Korea’s local tax agency has imposed this tax bill on the exchange.
According to documents published via the financial supervisory services by Vidente Co., the Bithumb’s largest shareholder, said that the National Tax Service required the exchange to pay the withholding taxes on trading activities of foreign customers. They reportedly received the tax earlier this week, after purchasing a 34.24% stake in the parent company of the cryptocurrency exchange.
The law stated a person paying pension income, salary income, and other income is ordered to withhold income tax at the time of such payment and to pay it to the government. It means that Bithumb Korea has the responsibility to pay the withholding tax to the government on behalf of its foreign customers and it should receive the money from its foreign customers. However, it is nearly impossible for Bithumb Korea to get back the money from its customers and does not know how many foreigners use Bithumb Korea.
A foreign company that has no permanent institution in South Korea has to pay withholding tax. The thing is such taxation rules have not yet been applied to the cryptocurrency trading industry. While following the regulation, Bithumb Korea considers to put up administrative litigation to avoid paying the tax bill.
2019 is a difficult year for Bithumb Korea
In March, Bithumb Korea has witnessed over 3 million EOS (about $12.5 million at the time) withdraw from its hot wallet in a hack. Then, in June, the exchange was indicted for its failure to take appropriate action to protect personal information under the information protection article of Korea’s Information Communication Network Act, leading to $14 million funds stolen by the hacker.
The company was also the victim of a rumor that suggested a police raid and closure of the exchange’s Shanghai offices, but a Bithumb spokesperson later informed media that the rumors are false.
We have seen that 2019 is a significant development when it comes to cryptocurrency taxation. Countries around the world have realized cryptocurrencies are here to stay and adjusted their crypto tax policies as a result in order not to miss out on the revenues.