- NTS is investigating Bithumb over possible tax evasion.
- They were previously accused of similar incidents in 2018, but the charges were reversed.
- From January 2023, crypto gains over KRW 2.5 million ($1,750) will be taxed by 22%.
In an investigation for possible tax evasion, The National Tax Service (NTS) of South Korea has launched a “special tax investigation” into Bithumb Korea and Bithumb Holdings. Officials are investigating the possibility of Bithumb not complying with the tax regulation set by the country on cryptocurrency activity.
As reported by a major South Korean news agency, Bithumb’s headquarter in Gangnam-gu, Seoul, was raided by tax agents on January 10, 2023, to investigate the company’s compliance with the tax regulations on cryptocurrency activity.
The tax officials would conduct detailed examinations of international and domestic transactions made by Bithumb Korea, Bithumb Holdings, and associated entities. A department within NTS, called the 4th Bureau of Investigation of the Seoul Regional Tax Services, is conducting the operation.
Bithumb is not new to this scenario as they were previously investigated upon similar allegations in a similar case in 2018 where they were fined a multi-billion-dollar for back taxes. However, the company was proven innocent following further investigations.
The company seems to know very well how to remain in headlines, as its former chairman, Lee Jung-Hoon, was charged with a $100 million deceit but later found not guilty of the crime.
Another former chairperson at Bithumb, Kang Jong-hyun, and his younger sister was also questioned by South Korean prosecutors over an embezzlement case that involved Yonhap rep, a related company.
South Korea & Crypto Taxes
The previous administration of South Korea, under President Moon Jae-in, announced that they plan to tax certain crypto transactions from January 1, 2022. But pushed the plan further till January 2023.
The current President, Yoon Suk-Yeol, who took the oath in May 2022, suggested that the date be moved even further to 2025.
The main problem in taxing cryptocurrency is a different school of thought, considering them as either currency or assets. As both these are taxed differently and have distinct laws associated with them. South Korea had taken a very clear stand in the Organization for Economic Co-operation and Development (OECD) that they treat crypto as an asset more precisely as virtual assets, specifically for tax purposes. So that it now follows the country’s tax laws for assets.
Mining and Buying Cryptocurrency
Mining, buying, or acquiring any cryptocurrency does not fall under the bracket of taxable items. However, any transaction on these acquired assets, be it converting to another form, lending, loaning, transactions, etc., will put them in the tax bracket.
Key Principle for Crypto Taxation
The key principle for taxation says that the items that are exclusively and expressly mentioned, meaning including every possible detail in the country’s tax laws, will be subjected to taxation only.
Current Scenario
As of January 2023, any crypto gain in the country amounting to over KRW 2.5 million ($1,750) will be subjected to taxation at a flat rate of 22%, while the gains must be reported annually during the income tax period.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/01/11/nts-of-south-korea-probes-bithumb-over-possible-tax-evasion/