Coin News

South Koreans To Pay A Hefty Gift Tax On Crypto Airdrops

22 Aug, 20223 min readRegulation
South Koreans To Pay A Hefty Gift Tax On Crypto Airdrops

As the use of crypto assets increases, different jurisdictions create laws to govern their applications and controls. Some rules are connected to various aspects, with regulations and taxation taking significant roles.

In a global analysis, cryptocurrency taxation is getting the high side. This is because most governments want to reap from the trading and transfers characterizing several transactions with virtual assets.

In a recent development, the South Korean Ministry of Strategy and Finance brings in a new taxation gift on cryptocurrency airdrops. The authorities are levying the tax on third parties who get the cryptocurrency transfers free.

According to the Ministry of Finance spokesperson, the free transfer of virtual assets is categorized as a gift. The categorization is done under the Inheritance and Gift Tax Act.

The South Korean Ministry of Finance disclosed its plans early on August 22. This was during its response to a tax law interpretation for the freely movable digital asset. There has been a demand to ascertain if the authorities would implement the gift taxation law.

In the operation of cryptocurrency protocols, airdrops are very famous. It offers an opportunity for digital asset holders to receive rewards from a protocol in the form of the native crypto token. Airdrops usually occur during the period that an existing blockchain undergoes hard forking for the function of a new one.

Also, it can happen when depositing crypto assets to a blockchain network. A gift tax also applies to crypto staking, where customers receive rewards as digital assets.

Crypto Taxation On Capital Gains

A report from a South Korean local news publication mentioned that 2025 is the considerable time for the kick of taxes on digital asset capital gains. But gifting virtual assets will still fall under the current jurisdiction.

The South Korean gift taxation law applies to all items of economic value which can be converted to fiat currency. The authorities set the gift tax between 10% to 50% of the total values of received gifts. Users with the obligation of paying gift tax are expected to file for the gift taxation within three months of getting them.

The tax arm stated that the subject of taxation for any gift of a digital asset is the principal value. It revealed that only the reinforcement of additional legislation could allow the exclusion of airdrops from gift tax.

This present situation may prove unacceptable for many crypto enthusiasts in South Korea. While the government is looking to increase its revenue source, the digital currency community will consider it a loss to their gains. But then, that’s part of why many people frown at regulations.

Source

Subscribe to get our top stories

Coin News
App StoreApp Store