In South Korea, recipients of crypto airdrops could be taxed with an up to 50% fee. A government official said that crypto airdrops count as gifts under tax legislation.
Airdrops, or blockchain-based token giveaways, are one of the ways crypto companies market their initiatives.
South Korea said in 2021 it will start taxing inherited or gifted tokens under local inheritance tax laws. The tax authority interprets this to include crypto airdrops, a Ministry of Economy and Finance official said on August 22, Digital Times reported.
The gift tax could be levied on the person who receives the airdrop, the official said in response to a query on the matter. The recipient will have to file a tax return within three months of the airdrop and tax will be levied at 10%-50%, the report said. The tax will be considered on a case-by-case basis, an official from the tax industry told Digital Times.
South Korea plans to start taxing crypto earnings by 2025, including a 20% tax on annual gains exceeding 2.5 million won (about $1,860). It’s not alone. Recently, the country has taken a number of actions to clamp down on illicit activity in the crypto market. Sixteen crypto platforms are facing suspension during this crackdown, with regulators saying that some foreign platforms have not registered domestically. Some of those include KuCoin, Phemex, and Bitglobal.
The South Korean police agency is also experimenting with allowing crypto seizures when fines have not been paid. It expects to collect 1 billion won in unpaid fines by the end of the year.
Meanwhile, authorities in the country are still continuing with the investigation of Terra. They have intensified the examination of the company and the crash of LUNA and UST. Other countries have also expressed concern about the project and its crash.
Projects are now being much more cautious about their strategies as regulators bear down on them in the wake of that crash. Regulators are also probing foreign exchange transactions at commercial banks for the illicit use of crypto.