South Korean Court Cancels Cryptocurrency Exchange Tax, Citing Legal Ambiguity

In 2018, Coinone, a major South Korean cryptocurrency exchange, was hit with an other income tax by the National Tax Service, claiming the company didn’t withhold taxes on gains made by foreign users. However, the Seoul Administrative Court recently ruled in favor of Coinone, canceling the tax collection. The court argued that virtual assets like cryptocurrencies couldn’t be easily classified as ‘domestic assets’ under the Income Tax Act. It emphasized that without clear provisions in the law, taxing such income leads to unstable tax jurisprudence. This ruling echoes a similar decision earlier this year involving Bithumb Korea, another crypto exchange, further challenging the taxation of cryptocurrency-related income in South Korea.

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