South Korea’s Government is Reportedly Planning to Hit Cryptocurrency Exchanges with Tax Bills

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Image credit: Heart of Seoul at Night in South Korea. Photo by Public Domain.

South Korea’s government is reportedly hitting the country’s digital currency exchanges with tax demands in a bid to control the market.

According to the Yonhap News Agency, South Korean cryptocurrency exchanges will be required to pay 22 percent of corporate and 2.2 percent of local income taxes if they had an annual income of over 20 billion won ($18.7 million) on last year’s earnings.

The report suggests that Bithumb, one of South Korea’s biggest digital currency exchanges, will be expected to pay around 60 billion won in corporate and local income taxes after it generated roughly 317.6 billion won last year.

Not only that, but digital currency exchanges will soon be required to share users’ transaction data with banks as another method for authorities to collect tax payments. According to a finance ministry official banks are expected to introduce the system later this month or early February.

This move comes at a time when global regulators are increasing their focus on the cryptocurrency market amid heightened interest from investors. Last month saw bitcoin reaching within touching distance of $20,000 for the first time. However, since then a selloff in coins and a major market price correction has seen the currency’s value drop alongside others such as ethereum, ripple, and litecoin.

Amid concerns that the market is experiencing a bubble in prices, the South Korean government has been stepping up efforts to monitor digital currency trades. This can already be seen by the fact that officials have taken measures to prevent foreign investors from trading digital currencies on local exchanges in order to bring the market under control. South Korean cryptocurrency exchange Korbit has revealed that it will be terminating its digital currency account this month in order to implement accounts linked to users’ identities. Not only that, but foreign investors will be prohibited from depositing funds into their accounts

Interestingly, while it was reported last month that the South Korean government had refuted reports that there was the possibility of a digital currency trading ban in the country, a more recent report suggests that South Korea’s financial regulator chief has said that the government is thinking about shutting down all local digital currency exchanges. According to the country’s justice minister, the ministry is preparing a bill to ban cryptocurrency trading.

However, while the government is making moves to ban trading in the country, Kim Sang-jo, chairman of South Korea’s Fair Trade Commission, stated during a radio show that shutting down cryptocurrency exchanges would not be ‘realistic’ due to the fact that the government doesn’t have the authority to do so based on existing laws and regulations.

With various measures being taken from global officials the price of bitcoin is struggling to regain to previous highs and is currently trading at over $10,800, according to CoinMarketCap.