National Tax Service Announces 40 Billion Won Tax Notice... Bithumb "100% Support for Customers"

2018~2021 Event Participants of 10,700 Classified as Other Income Tax
Bithumb Also Provides Tax Services Related to Comprehensive Income Taxation

On the 10th, Bithumb announced that it will prepay 100% of the 40 billion KRW tax assessment notice issued by the National Tax Service (NTS) to users who participated in past virtual asset distribution events such as Bithumb's virtual asset payouts on behalf of its customers. They also plan to provide tax consultation services for individual users.

Through a notice on the same day, Bithumb informed that some users who participated in the 'virtual asset airdrop' events held between 2018 and 2021 received comprehensive income tax assessment notices, and stated that it will fully cover the related tax amounts. Customers subject to taxation can apply to Bithumb.

Previously, the NTS took the position that rewards such as virtual assets given to users through various events are taxable income for the users. Bithumb immediately submitted explanations to the NTS and opposed the decision, but was unable to prevent the tax assessment.

The current tax targets include about 10,700 participants in the events at that time, with a total event reward amount of 83.3 billion KRW, of which 20.2 billion KRW was notified as tax. Bithumb has already paid this amount. Additionally, about 19 billion KRW in taxes will be further notified to users as comprehensive income tax. Bithumb estimates the total amount to reach 40 billion KRW.

Bithumb will accurately determine the tax amount through sufficient communication and discussion with users. It will also provide tax consultation services and support appeal procedures related to comprehensive income tax through tax experts dedicated to individual users.

Bithumb plans to cover the entire amount of tax assessed on behalf of users. This decision was made because they believe it is necessary to establish a precedent to ensure users are prioritized for protection in case similar cases arise in the future.

They also plan to continue legal disputes. Bithumb stated that it is currently pursuing tax appeals through the Tax Tribunal against the NTS's tax assessment on withholding tax for other income. The main argument is that virtual assets and fee paybacks provided through related events are considered sales discounts based on prior notices and agreements according to transaction performance, and therefore do not qualify as other income under the Income Tax Act.

A Bithumb representative said, "We understand that users felt bewildered and unfair due to this tax measure. Our management has made a magnanimous decision to support the difficulties and damages users may feel, even if it incurs costs amounting to hundreds of billions of KRW," adding, "Bithumb will demonstrate a corporate image that fulfills not only legal problem resolution but also moral responsibility to protect users."

Meanwhile, courts have previously ruled in favor of exchanges regarding the NTS's virtual asset tax assessments on Bithumb. The NTS had considered capital gains of 332.5 billion KRW from certain Bithumb users between 2015 and 2017 as income and imposed 80.3 billion KRW in taxes, but in February this year, the court ruled that there was no basis for taxation as other income and that the collection order should be canceled. In April, the court also ruled in favor of Coinone, another virtual asset exchange, regarding a withholding tax assessment of about 130 million KRW for other income for the same reason.