South Korea to Impose 10–50% Gift Tax on Crypto Airdrops

22 August 2022, 08:15 GMT+0000
Updated by Kyle Baird
22 August 2022, 08:15 GMT+0000
In Brief
  • The gift tax will range from 10 to 50%.
  • It marks yet another move by the South Korean government to exercise some control over the crypto market.
  • South Korea will impose capital gains tax on the crypto market in 2025.
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The South Korean government will impose a gift tax on crypto airdrops, with the tax rate ranging from 10 to 50%. Regulators will examine the airdrops on a case-by-case basis.

South Korea’s government has announced that it will begin imposing a git tax on crypto airdrops with the taxation rate being as high as 50% in some cases. The Ministry of Strategy and Finance said on August 22 that the taxation would be considered on a case-by-case basis and that it would range from 10 to 50%.

The transfer of assets via airdrops comes under the Inheritance and Gift Tax Act, with the government official saying that with respect to airdrops, “the gift tax will be levied on the third party to whom the virtual asset is transferred free of charge,” namely the airdrop receiver. The department said,

“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.”

The move marks another bit of regulation from South Korea. The country is expected to launch a capital gains tax on the crypto market in 2025, which has been delayed. Officials are also chalking up other aspects of regulation, including regulating exchanges.

South Korea moving forward with crypto regulation

The country has taken a number of actions to clamp down on illicit activity in the crypto market. Sixteen crypto platforms are facing suspension during this crackdown, with regulators saying that some foreign platforms have not registered domestically. Some of those include KuCoin, Phemex, and Bitglobal.

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The South Korean police agency is also experimenting with allowing crypto seizures when fines have not been paid. It expects to collect 1 billion won in unpaid fines by the end of the year.

Terra investigation continues

Meanwhile, authorities in the country are still continuing with the investigation of Terra. They have intensified the examination of the company and the crash of LUNA and UST. Other countries have also expressed concern about the project and its crash.

Projects are now being much more cautious about their strategies, as regulators bear down on them in the wake of that crash. Regulators are also probing foreign exchange transactions at commercial banks for the illicit use of crypto.

Disclaimer

BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.