South Korea will now tax crypto exchanges | finder.com

South Korea will now tax crypto exchanges

Peter Terlato 22 January 2018

The rates reflect South Korea’s corporate tax code for earnings of over 20 billion won (US$18.7 million).

The South Korean government will reportedly begin enforcing corporate tax legislation on local cryptocurrency exchanges from the end of March 2018, according to a spokesperson for the Ministry of Strategy and Finance.

Local media agency Yonhap News reports that the government requires local crypto exchanges to pay up to 22% in corporate taxes by the end of March and 2.2% in local income tax by the end of April on 2017 earnings.

The rates reflect South Korea’s corporate tax code for earnings of over 20 billion won (US$18.7 million).

Yonhap revealed that popular South Korean exchange Bithumb made 317.6 billion won (US$295.3 million) last year, and is therefore expected to hand over about 60 billion won (US$55.8 million) in related taxes.

South Korea’s crypto market is run by four major exchanges; Bithumb, Coinone, Korbit and Upbit. Bithumb is the country’s largest exchange by volume. However, in December Upbit reported higher 24-hour volumes.

Despite stirrings, South Korea has not finalized measures to outlaw cryptocurrency trading. However, the government and other regulator bodies are still debating the legalities of such an action, while continuing to work on a system to prevent the use of anonymous trading accounts and improve financial transparency.

In order for any shutdown to occur, a legislative bill would need to be passed through the National Assembly.

Earlier this month, Korea’s Financial Intelligence Unit (KoFIU) and Financial Supervisory Service (FSS) began carrying out joint inspections on six commercial banks offering trading accounts to cryptocurrency exchanges. The investigations will determine whether the institutions comply with South Korea’s anti-money laundering laws and whether they have appropriate measures in place to verify cryptocurrency customers’ identification.

Yonhap News reports that South Korean banks earned 2.2 billion won (US$2 million) in commissions during 2017 for providing virtual cryptocurrency accounts to investors. This compares with just 61 million won (US$57,000) made by the six banks in question throughout 2016, according to KoFIU and FSS statistics.

In early January, CoinMarketCap, an online source for cryptocurrency market capitalization figures and price movements, decided to unexpectedly remove South Korean exchanges valuations from its reported averages, causing a significant decline in the overall market cap and individual currency prices.

Keen to discover more about cryptocurrencies? Check out our A-Z list of the most popular altcoins.

This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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