📰 Table Of Contents
South Korean Crypto Exchange Customers Facing Unexpected Tax Bills
South Koreans who received airdrop tokens and prizes from the Bithumb crypto exchange from 2018 to 2021 could face unexpected tax bills. Bithumb has announced that it will cover the taxes for customers who have been asked to pay taxes on the giveaways, but the exchange is planning to challenge the National Tax Service’s decision.
Bithumb Airdrop Events Hit Hitch
Bithumb customers have been instructed to pay a total of approximately $30 million in taxes due to winning airdrop prizes and participating in cashback promotions. The National Tax Service estimates that Bithumb distributed assets worth nearly $61 million to South Korean residents during the mentioned period. This sudden tax obligation has surprised many, considering that South Korea does not tax crypto profits. However, the NTS requires winners of events like these to declare and pay taxes on their winnings, classifying them as “other income.”
- Residents must pay 22% of winnings exceeding $37
- 10,700 Bithumb users were asked to pay $15 million in taxes last year
Free Gifts or Prizes? Exchange to Dispute NTS Decision
Bithumb has promised to compensate customers for any taxes they had to pay the NTS. The exchange is also filing a tax appeal against the decision, arguing that the assets and cashback are free gifts exempt from taxation. The success of the appeal may depend on the nature of the event giveaways, according to South Korean tax experts.
Legal Process ‘Could Take Years to Resolve’
Experts suggest that Bithumb may compare its giveaways to stocks given by securities providers or gift certificates offered by shopping outlets to avoid taxes. However, appealing to the NTS is known to be time-consuming, and a ruling may take several years to emerge. Despite these challenges, Bithumb is working towards becoming the first South Korean crypto exchange to be listed on the nation’s stock exchange.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
