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South Korean cryptocurrency exchange Bithumb will contest a move by the country's tax agency to withhold millions of dollars in tax on foreign cryptocurrency transactions, CoinDesk reported citing a report from The Korea Times.
In Dec., the National Tax Service (NTS) announced that it will withhold a $69 million tax from Bithumb’s foreign customers. The agency calculated the amount based on the amount withdrawn by foreign clients. The withholding tax rate for miscellaneous income is 22 percent.
Bithumb has now filed a complaint against the NTS with Korea's tax tribunal, arguing that the tax imposed by the agency was “groundless.” The company says that as cryptocurrencies are not legally recognized currency, the agency does not have any ground to impose a tax of any kind.
Withholding tax is paid by the party that makes payment in a transaction, which essentially means that it will be Bithumb’s foreign customers who will have to pay the tax.
"We paid the full amount and have since been preparing for arguments. We believe we will be given a chance to clarify our stance in court," a Bithumb official said.
The Tax Tribunal has to decide whether or not to approve Bithumb’s motion to nullify the 80.3 billion won (~$69 million) in withholding tax imposed by the NTS within 90 days.
Choi Hwoa-in, an adviser to Financial Supervisory Service, also believes that the tax imposed by the NTS is baseless.
“Bitcoin under the current law is not an asset. It is clear and simple," she said. "The Ministry of Economy and Finance already made that clear. The NTS pushing ahead with the tax imposition is baseless and groundless, especially since it is still awaiting the ministry opinion on the same matter it sought again.”
Meanwhile, Bithumb is going to invest $8 million into the Busan blockchain zone. GCX Alliance, a Bithumb subsidiary, will be discussing the preliminary investment plans with the Financial Services Commission (FSC) this month. The exchange has also established its blockchain research and development center.
