Report: South Korea to Apply Gift Tax to Crypto Airdrops
South Korea has imposed a tax on cryptocurrency airdrops received by citizens. According to local reports, anyone who benefits from a crypto airdrop in South Korea is required to pay a specific amount of capital to the government. The amount to be paid within three months of receiving the cryptocurrencies ranges from 10-50% of the crypto asset received, depending on its value.
A crypto airdrop is a process by which portions of crypto tokens or coins are freely distributed to the wallet addresses of eligible users.
Gift taxes to be applied to crypto airdrops
According to the report, a tax law interpretation inquiry has been filed with the South Korean government on whether transactions involving the issuance of the same type or different types of digital assets as rewards are subject to gift tax. The transfer of free assets is considered a “gift” under South Korea’s gift tax law.
The Ministry of Strategy and Finance, a South Korean agency part of whose job is to develop and administer tax policies, responded to the inquiry on Monday, saying taxes should be paid when assets cryptographic are distributed free of charge. The government agency noted that the third parties involved in the process, i.e. those who receive the assets, will pay the tax.
According to the report, the agency added that the reason crypto airdrop recipients would be taxed is that a gift tax is imposed on all items of economic value that can be converted into traditional currencies in the country. So, since cryptocurrencies issued as airdrops can also be sold in exchange for fiat, gift tax law applies to them.
Meanwhile, the South Korean government is plan to apply the act to profits from trading crypto assets in 2025.
The government would consider certain factors
The South Korean Ministry of Strategy and Finance also noted that the imposition of gift tax might not apply to all crypto airdrops, as it would be determined on a case-by-case basis.
“Whether a specific virtual asset transaction is subject to gift tax or not is a matter to be determined taking into account the situation of the transaction”, such as whether the asset in question is recognized as property in the country, the agency reportedly said.
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