Authorities in South Korea plan to impose a gift tax on crypto airdrops in the country, with the taxation rate exceeding 50% in some cases. The Korean Ministry of Strategy and Finance explained earlier today that the taxation would be implemented on a case-by-case basis, adding that it would range between 10% and 50%, depending on the situation.
The authorities detailed that the transfer of crypto assets via airdrops falls under the Inheritance and Gift Tax Act, adding that “the gift tax will be levied on the third party to whom the virtual asset is transferred free of charge,” which is the receiver of the airdrop. The department detailed:
“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.”
South Korea Is Ramping Up Crypto Regulation
The latest development marks another foray into the crypto industry by the Korean government. Already, South Korea is slated to launch a capital gains tax requirement on the crypto industry in 2025. Government officials are also in the process of developing more regulations for the domestic crypto space, especially crypto exchanges.
The Asian nation has undertaken numerous initiatives to combat the illicit use of cryptocurrency within its jurisdictions. Currently, 16 crypto trading platforms are on the verge of suspension amid a longstanding crackdown on illegalities in the industry. Authorities claim some foreign exchanges are facing possible suspension for failing to register domestically. Some of these platforms include KuCoin, Phemex, and Bitglobal.
Meanwhile, the South Korean police agency is considering allowing crypto seizures as punishment for fine payment defaults. The agency expects to collect 1 billion won ($743K) in unpaid fines by the end of 2022.
