South Koreans Will Have to Pay A Heavy Gift Tax on Crypto Airdrops
As per the latest reports, the Ministry of Strategy and Finance is looking to introduce a new gift tax on airdrops for crypto assets. Earlier today, August 22, the ministry was responding to a tax law interpretation for freely transferable cryptocurrencies, and whether they can implement the gift tax for the same.
A spokesperson of the Ministry of Finance said: “The free transfer of assets is a ‘gift’ under the Inheritance and Gift Tax Act. In this case, a gift tax will be levied on the third party to whom the virtual asset is transferred free of charge”.
Airdrops are quite popular in the crypto space wherein a platform rewards the holders of its native digital assets. Airdrops specifically happen at the time of hardforking the existing blockchain to a new one or while depositing virtual assets to a blockchain network. Another form of crypto rewards is crypto staking which may also be subject to a gift tax.
Crypto Gift Taxes to be Between 10-50%
Citing tax authorities, South Korea’s local news publication reported that taxes on the capital gains from virtual assets will begin in 2025. However, gifting virtual assets will still fall under current jurisdiction.
The gift tax in south Korea is applicable to all objects of economic value that are convertible into money. The person obligated to pay gift tax will have to file for a gift tax within three months of receiving them. This could be anywhere between 10-50% of the total value of the gifts received.
An official from the tax industry said: “In the case of a free gift of virtual assets, the principle is, of course, the subject of taxation”. The Ministry of Strategy and Finance noted:
“Whether a specific virtual asset transaction is subject to gift tax or not is a matter to be determined in consideration of the transaction situation, such as whether it is a consideration or whether actual property and profits are transferred”.
In order to exclude airdrops from gift tax, it needs to be reinforced through additional legislation.
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