- South Korea will implement a gift tax of crypto assets such as airdrops.
- These gift tax laws will come into play this fiscal year.
- Those subject to the gift tax must file for a gift tax return within the designated time period.
According to a Reddit post that translated a news article from South Korea, it seems the nation has pushed another tax on crypto assets. In particular the South Korean government is imposing a 10%-50% gift tax on free transferable cryptos including airdrops.
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Specifically, the tax was called for by the South Korean Ministry of Strategy and Finance. They confirmed their decision on August 22, 2022. In detail, the move came in response to a tax law interpretation inquiry.
To highlight, the inquiry asked if a transaction where the virtual asset issuer where to provide a virtual asset of a similar or different sort to a member who owns the specific virtual asset. In this case, would the transaction be subject to the gift tax?
In conclusion, the free transfer of assets will be classified as a ‘gift’ under the Inheritance and Gift Tax Act. Therefore, a gift tax will be levied on the third party to whom the virtual asset is given free of charge.
Adding on, according to the tax authorities, it seems that taxation on capital gains from virtual assets will kick off in 2025. However, it seems the gift tax will be implemented this fiscal year. What’s more, the article confirms that the aim of the gift tax is to levy comprehensively on all objects of economic value. More so, due to the fact that these objects can be converted into money.
Lastly, the article says that every person who is obligated to pay the gift tax must file a gift tax return. In fact, they must file it before the end of the third month after which the gift was received. Finally, the article confirms that the rate of the tax levied will vary between 10%-50% based on variant cases.
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