South Korea has imposed a tax on cryptocurrency airdrops received by citizens. According to local reports, anyone who benefits from a crypto airdrop in South Korea is required to pay a specific amount of capital to the government. The amount to be paid within three months after receiving the cryptocurrencies ranges from 10 to 50 percent of the crypto asset received, depending on its worth.
A crypto airdrop is a process through which portions of crypto tokens or coins are freely distributed, to the wallet addresses of eligible users.
Gift Taxes to Apply to Crypto Airdrops
Per the report, a tax law interpretation inquiry was tabled before the South Korean government on whether transactions involving issuing the same or different kinds of digital assets as rewards are subject to gift taxes. The transfer of free assets is considered a ‘gift’ under South Korea’s Gift Tax Act.
The Ministry of Strategy and Finance, a South Korean agency, part of whose job is to develop and administer policies with regard to taxes, responded to the inquiry on Monday, affirming that taxes have to be paid when crypto assets are given out for free. The governmental agency noted that third parties involved in the process, that is, those receiving the assets will pay the tax.
According to the report, the agency added that the reason crypto airdrop beneficiaries would be taxed is that a gift tax is imposed on all objects of economic value that can be converted to traditional currencies in the country. So since cryptocurrencies issued as airdrops can also be sold in exchange for fiat, the gift tax act applies to them.
Meanwhile, the South Korean government is planning on applying the act to profits gathered from trading crypto assets in 2025.
The Government Would Consider Some Factors
The South Korean Ministry of Strategy and Finance also noted that the gift tax imposition may not apply to all crypto airdrops as it would be determined on a case-by-case basis.
“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 the asset in question is recognized as property in the country, the agency reportedly said.
