Crypto Exchanges in South Korea have to Pay Taxes in Line with Existing Tax Rate

The soaring prices of cryptocurrencies at the end of 2017 have left many questions in the minds of financial and crypto experts. This is because the value of most of the digital currencies hit all time high records in the last week of December. Bitcoin, Ethereum, and Ripple gained too much value that investors all over the world began to think investing in virtual currencies. This spike in the values of these currencies continued in the first week of January after the South Korean Government announced to impose a ban on the trading of cryptocurrencies. This announcement affected negatively on the cryptocurrency trading and the values of top currencies started declining.

Here, it is important to mention that South Korea is the largest center of cryptocurrencies trading. Many of the world’s largest crypto exchanges are based in Seoul. Yesterday, the government regulators have announced the imposition of taxes on all the crypto exchanges in the country. According to Yonhap, the government has imposed 24.2% tax on all the crypto exchanges in the country. Out of this 24.2% tax, 22% is the corporate tax and 2.2 is the local tax.

This tax implementation has come after the completion of anti-money laundering investigations into six major South Korean banks. Here, it is pertinent to mention that this probe showed a 36 times increase in commissions through virtual accounts linked with crypto exchanges. In other words, the commission increased from 61 million won in 2016 to 2.2 billion won in 2017.

According to the regulations, the largest South Korean crypto exchange Bithumb earned 317.6 billion won in 2017. It has to pay almost 60 million won in taxes. Upbit, Coinone, and Korbit are among the other top crypto exchanges that are facing governmental taxations.

On the other hand, these crypto exchanges and investors from the country have filed a petition against this regulation. This online petition started on December 28th and reached 212,700 signatures on January 16th. Now, according to South Korean Law, the government has to give response to this petition within 30 days. The petition requests the government to renounce the proposed regulations against the crypto exchanges and trading. However, the petition also accepts some of the regulations of the government.

For example, the petition supports the government’s ban on opening of virtual accounts. Instead, it also stresses on using the original names in opening accounts. In short, all the crypto exchanges are ready to accept the “right set of regulations”. They are opposing the idea of banning underage and foreigners to invest in South Korean crypto exchanges. They are considering it the “end of happy dreams”. Here, it is worth mentioning that cryptocurrency trading is gaining much popularity in South Korean youth. This is because of increasing unemployment in the country.

In the end, we can say that these regulations, if all imposed, will cast a negative impact on South Korean economy which is the fourth largest economy in South Asia. However, a little change in these regulations would legalize the cryptocurrency trading in the country and boom its economy.