South Korea Ministry of Strategy and Finance has made a new revelation about virtual Airdrops. The Ministry disclosed that Airdrops might also attract gift tax. This development manifested when attending to the Ministry’s questions about the tax law of virtual assets.
The question inquired if South Koreans would pay taxes on any virtual assets they received via any form of transaction. The Ministry described the free exchange of virtual assets as a Gift. Therefore, making such transactions liable to tax under the inheritance and Gift Tax Act. The Ministry said, “In this case, a gift tax will be levied on the third party to whom the virtual asset is transferred free of charge.”
The Ministry further added that an investor would pay taxes on every digital asset such an investor receives from a crypto exchange. Meanwhile, There are plans by the Government to introduce capital gains on digital assets by 2025. Confirming this development, the Tax authority in South Korea disclosed that while taxation on capital gains is yet to come into effect, the gift tax will still play its role.
Crypto taxation is effectively gaining ground globally. While authorities and the government struggle to develop effective regulations to protect the industry. Taxes keep slamming the industry. To some extent, there are indicators that some authorities care more about generating revenue from the industry instead of protecting it.
Heavy taxation could instigate a negative trend in the embracement of crypto in a country. In India, crypto adoption has followed a downturn after the government imposed a 30% tax and 1% TDS on crypto in the country. Ever since crypto exchanges in the country have struggled to cope with the harsh consequences of a dip in trading volume.
On a positive aspect, the South Korean Government has shown more significant concern about crypto investors in the country. Recall that immediately after the LUNA and UST tokens collapsed, security operatives commenced an investigation on the issue. The agencies, through their research, discovered that one of Terraform Labs’ staff laundered a huge part of the firm’s Bitcoin reserve.
Out of great concern, Lawmakers in the country also started sternly studying the crash of the two tokens. At the end of the study, they crafted new regulations about stablecoins to protect investors. Thus, earning the country a good reputation regarding crypto investors’ protection.
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