According to local news site Yonhap News Agency, South Korean officials have interpreted current rules to suggest that crypto airdrops may be liable to “gift tax” (YNA), as reported by Cryptoslate.
Ministry of Strategy and Finance, said, “ In this case, a gift tax will be levied on the third party to whom the virtual asset is transferred free of charge.”
According to a new economic blueprint supported by newly elected President Yoon Suk-yeol, who is pro-crypto, taxes on capital gains from digital assets won’t be implemented until 2025. This was required, according to Suk-yeol, to provide “adequate market infrastructure.”
However, as per tax authorities, “A person obligated to pay tax must file a gift tax return within three months from the end of the month in which the gift date belongs, and the tax is levied at a rate of 10-50 %.”
The Ministry of Strategy and Finance’s position is, however, far from secure. According to other government officials, gift tax determinations should be made on a case-by-case basis.
The Ministry partially agreed, stating that whether or not an airdrop qualifies as a gift for gift tax purposes will be decided “in account of the transaction situation.”
The lack of a clear crypto framework has been brought to light by the divergence of government agencies’ positions on the issue, which is further compounded by the addition of tax legislation, Cryptoslate noted.
A cryptocurrency airdrop is the free release of a digital asset token, usually done to support a new initiative. Through airdrops, a project’s team can provide a degree of equitable token distribution to the grassroots community. Giving away free tokens also increases awareness of the token, broadens its appeal, and rewards early community members.
The ApeCoin airdrop that occurred in March is a current, well-known illustration of this. Holders of the Bored Ape and Mutant Ape NFTs received 62% of the total supply as part of the airdrop.
One Bored Ape and its corresponding Kennel Club NFT were given to a person who also acquired 10,950 Ape tokens. APE reached its all-time high on the day of the airdrop at $28, thus users who sold the top would have made a tidy $306,600.
(With insights from Cryptoslate)
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