While the global markets for cryptocurrencies exploded in 2017, South Korea was one of the countries that saw a massive spike in trading volume as crypto-mania took over. There were often high premiums being paid by traders on South Korean exchanges as the high levels of demand were placing demands on the liquidity of even the major cryptos.
The surge of cryptocurrency trading, of course, proved to be lucrative for the South Korean exchanges who were earning their trading fees from these users. It has now been reported that there was about $648 million in taxable revenue made by these exchanges in 2017.
The profits gained by the exchanges showcases how lucrative this business can be, as well as being an excellent source of tax revenue for the South Korean government. There has been a crackdown as of late by the authorities in the region to ensure that the exchanges are meeting their tax obligations.
What Were Other Significant Figures Released by This Report?
These figures came from a government report, and it showcased how the Upbit exchange created over half of the revenues earned by these South Korean exchanges; is now one of the most popular crypto trading exchanges in the world.
A prominent lawmaker named Park Kwang-on officially released the data, and it was published in national newspapers.
When comparing the taxable revenue figures for 2017 with the previous year, it shows a massive 8,025 percent increase year on year, with this figure being just $7.5 million for 2016 compared to the $648 million generated in 2017.
What are the Main Reasons for these Increases?
For most of 2017, the exchanges benefited from lively markets that remained competitive day to day as digital currencies began to breach into the mainstream world and more people became aware of their benefits.
It was in December that there was a slowdown in trading as a result of the government in South Korea talking about potential restrictions that might be implemented in the future, with there even being the talk of a potential blanket ban on all forms of cryptocurrency trading. Thankfully for the exchanges and traders in South Korea, no such ban has been implemented as of yet.
How is the South Korean Government Dealing with the Exchange’s Tax Obligations?
It was in January 2018 that there were demands made by lawmakers directed towards the exchanges which saw them requesting that both local income tax and corporate tax be paid on these revenues, which would add up to approximately 24 percent of relevant revenues earned during the tax year.
As a result, Upbit will have to fork out the most, followed by Bithumb, Coinone, and Korbit. The government has said that the corporate tax payments have to be made by the end of March, with the local income tax payments anticipated to be paid before the end of April.