Astronomical Taxes: Korean Exchange Bithumb Expected Tax Rate 24.2%

Seoul Yonhap News Kim Gyeong Yoon

Korean exchange Bithumb's taxes for this year's income have been estimated at nearly 56 Million USD (equivalent).

Last year as the profits from Korea's cryptocurrency exchanges soared, the government has raised taxes to an estimated 24.2%. This tax consists of a 22% corporate tax and a 2.2% state tax.

The Ministry of Strategy and Finance spoke Monday saying

"cryptocurrency exchanges must report their corporate taxes for all
net income of 2017 by the end of this March."

Exchanges are also required to report 10% of this corporate tax as state tax by April 30th.

Following last year's tax reform by Moon Jae-In's administration, this corporate tax is included as a tax against 'the rich'.

Thus companies exceeding 20 million annual revenue are subject to the 22% corporate tax rate. Companies are broken up into 3 different tax rates, 0-1.9 million at 10%, 1.9-18.8 million at 20%, and over 18.8 million at 22%.

If we add the additional 10% state tax here, the total rate comes to 24.2%

Out of the 3 biggest Korean exchanges Bithumb's revenue is estimate to have exceeded 282 million.

According to Yujin Investments last fiscal year Bithumb's annual revenue was calculated just over 300 million based on monthly commission rates and trading volume.

Their annual revenue is almost identical to revenue earned from commissions.

And according to financial statements released by Bithumb, last year's revenue was 46 million up until July, 45.9 million of which was from commissions.

Using this data as a basis, last year's net income was roughly 79.3% of annual revenue. Bithumb's net profit for last year looks to be over 235 million.

And if we apply the 24.2% tax rates their taxes should roughly equate to 56 million.

As Bithumb ranks as the (2nd) largest exchange in the world ranked by trading volume along with other exchanges like UpBit (1st), Coineone (11th), and Korbit (17th); how much taxes will these exchanges pay is becoming a topic of interest.

According to www.coinmarketcap.com Korean exchange UpBit was ranked first with a trading volume of over 403 million USD at 5:30pm Korean Standard Time on Sunday.

Bithumb was 2nd with 393 million, Coineone came in 11th with 45 million and Korbit with 17.5 million in 17th place.

The Ministry of Strategy and Finance also said,

"Our assessments don't exactly line up with actual profits, however,
before tax reforms are made the highest tax rates will still apply."

Out of Korea's 590,000 corporations, only 330,000 are paying taxes, and according to 2016 assessments only 0.01-0.02% of companies (about 77) were over the 300 million revenue cutoff for taxes.

Taxes on cryptocurrency and their exchanges can increase from here. Because, with the new tax reforms this year, the corporate tax rate is expected to rise an additional 3 points to 25%.

Original Article: http://news.naver.com/main/read.nhn?mode=LSD&mid=shm&sid1=101&oid=001&aid=0009827304