Cryptocurrency

South Korea may levy up to 50% ‘gift tax’ on crypto airdrops under current law

South Korean officials interpret the existing law to mean c.Lipt airdrops may be subject to ‘gift tax’, according to local media Yonhap News Agency (YNA).

official of The Ministry of Strategy and Finance, which oversees the country’s financial and social development policies, said:

“In this case, the third party who transferred the virtual assets for free will be subject to gift tax.

Virtual currency airdrops may be taxed up to 50%

Based on a new economic roadmap championed by recently elected crypto-friendly people President Yoon Seok-yeol, the government will not tax capital gains from digital assets until 2025. Suk-yeol said this is necessary to prepare “sufficient market infrastructure”.

However, according to the tax authorities, the gift tax is now “a blanket tax on all things of economic value,” at rates as high as 50%.

“Gift taxpayers must file a gift tax return within three months from the end of the month to which the gift date belongs, and the tax rate ranges from 10% to 50%.

Nevertheless, the status held by The Ministry of Planning and Finance has not yet been established. Other government officials have said gift tax decisions should be made on a case-by-case basis.

The ministry agreed to some extent, saying that classifying airdrops as subject to gift tax would be determined “in consideration of the circumstances of the transaction.”

The disagreement between government agencies on this issue highlights the lack of a definitive cryptographic framework, which is further complicated by the addition of tax law.

What is airdrop?

A crypto airdrop is a free distribution of digital asset tokens, primarily to promote new projects.

Through airdrops, the project’s team can provide some degree of fair token distribution among the grassroots community. Additionally, distributing free tokens will increase awareness, spread token appeal, and reward early community her members.

A recent high-profile example of this is ApeCoin Airdrop, which took place in March. As part of the airdrop, 62% of the total supply was distributed to Bored Ape and Mutant Ape NFT owners.

An individual holding one Bored Ape and accompanying Kennel Club NFT received 10,950 Ape Tokens. On the day of the airdrop, APE peaked at his $28.00.

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