According to a report, the South Korean government will impose a donation tax on crypto airdrops at a rate of 10% to 50%. Regulators have announced that they will review airdrops on a case-by-case basis.
Airdrops beneficiaries: a three-month delay
Tax regulations on crypto donations in South Korea could get more complex. That’s because this time, it’s cryptocurrencies received as part of an airdrop that are in the regulator’s crosshairs.
The South Korean Ministry of Strategy and Finance has informed about the application of inheritance and gift tax provisions to airdrops as part of an investigation into the interpretation of tax laws.
The Ministry of Strategy and Finance said on August 22 that taxation would be considered on a case-by-case basis and would range from 10 to 50 percent. Airdrop recipients will have to file their tax returns within three months.
The transfer of assets by airdrop falls under the estate and gift tax law. The official said that for airdrops, “gift tax will be levied on the third party to whom the virtual asset is transferred free of charge,” namely the airdrop recipient.
The department stated:
Whether or not a specific virtual asset transaction is subject to gift tax must be determined based on the situation of the transaction, such as whether it is a consideration or whether actual property and profits are transferred.
Regulation of cryptos in South Korea
The country has taken a number of steps to crack down on illicit activity in the crypto-market. 16 crypto platforms are at risk of being suspended during this crackdown. Regulators claim that some foreign platforms have not registered in the country. These include KuCoin, Phemex and Bitglobal.
South Korea’s law enforcement agency is also experimenting with allowing seizures of cryptocurrencies when fines have not been paid. It plans to collect 1 billion won in unpaid fines by the end of the year.