Cryptocurrency

South Korea Move Towards “Gift” Taxation On Free Crypto Airdrops

While developing the country’s crypto regulation, authorities proposed an airdrop tax before transactional earnings.

Cryptocurrency

South Korea Move Towards “Gift” Taxation On Free Crypto Airdrops

While developing the country’s crypto regulation, authorities proposed an airdrop tax before transactional earnings.

South Korea has continued to determine how it will regulate revenues from the lending and trading of digital assets and tokens.

Today, South Korea’s Ministry of Strategy and Finance proposed that any airdrops of virtual assets, hard forked tokens, or rewards from staking would be subjected to face a gift tax.

Under the country’s Inheritance and Gift Tax Act, any free-of-cost cryptocurrency transfers to users’ wallets would be taxed accordingly, Digital Times reports citing a government official.

The country’s current gift taxing is levied at a rate of 10-50% and must be filed within 3 months of the receivable. The determining factor for which transactions are entitled to the gift tax is up to the individual cases.

“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,” specified in the ministry’s statement.

The taxation would be charged to the third party who collects the digital assets or tokens at no additional cost.

“This is because gift tax is comprehensively levied on all objects of economic value that can be converted into money, or on all legal and de facto rights that have economic benefits and property values,” the statement affirmed.

After South Korea’s government proclaimed crypto as virtual assets in its law, authorities have openly shared the difficulty in constructing guidelines for crypto-based transactions.

Due to the various new transaction types that digital payments entail, the taxation of these transactions is challenging.

As tax authorities attempt to grasp the details of digital asset dealings, the reinforcing of this legislation marks Korea’s persistent efforts toward crypto policies.

Last month, South Korea postponed its 20% crypto tax for the second time – further delaying the planned tariffs to 2025.

The country has turned its focus toward regulating the crypto market and generating sufficient infrastructure prior to introducing taxes because of the required groundwork for investor protections and the current condition of the crypto market.

In other crypto news, Celsius CEO addresses ‘difficult’ freezing of user crypto assets.

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