Bithumb Exchange files legal claim with Tax Court for $ 70 million
The largest cryptocurrency exchange in South Korea, Bithumb, has filed a complaint with the Tax Court against the National Tax Service (NTS). The company wants the Court to vacate a tax for nearly $ 70 million, which the NTS previously imposed on its clients.
In late 2019, NTS imposed $ 69.3 million withholding tax on the exchange's foreign clients, according to a report . At the time, this was the first confirmed case in which the Korean government has imposed cryptocurrency transactions. The popular exchange noted that it will take legal action against NTS's decision, and it appears they have.
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Bithumb had filed a complaint with the Tax Court. The company claims that it has already paid the required amount of tax and that the NTS request is “unfounded.” A Bithumb official spoke on the matter:
“We paid the full amount and since then we have been preparing for arguments. We believe that we will be given the opportunity to clarify our position in court. "
Withholding (withholding) tax must be paid to the government by the payer of the income, not the recipient. The Court has to make a decision on the case in the next 90 days.
The arguments
Bithumb's defense is also based on the fact that digital assets are not yet currencies. legally recognized in Korea, and the authorities should not impose a tax on them.
This is where the main contradiction comes from. The NTS considers that all earnings withdrawn in Korean won from foreign customers should be taxed. However, experts on the subject also seem to support Bithumb's argument that cryptocurrencies are not yet under tax laws. Choi Hwoa-in, an advisor to the Financial Supervision Service, reportedly spoke about this:
"Bitcoin under current law is not an asset. It is clear and simple. The Ministry of Economy and Finance has already made it clear. The NTS going ahead with the taxation has no foundation or foundation, especially since it is still awaiting the opinion of the ministry on the same matter that it sought again.".
He also seems to believe that the NTS will try to implement more tax regulations on crypto trading in the future. He further views Bithumb’s current motion to dismiss the case as “calculated” and that the exchange could receive a partial or full refund of the amount it paid.
