Due to a lack of legal framework and investor protection safeguards, South Korea has repeatedly delayed the implementation of its cryptocurrency Gift Tax.
Despite the suspension of the cryptocurrency gains fee until 2025, the South Korean Ministry of Strategy and Finance said on Monday that hard forked tokens, staking incentives, and airdrops of virtual assets will all be subject to income taxes under the Inheritance and Gift Tax Act.
Under South Korean law, cryptocurrencies are regarded to be a type of virtual asset.
The South Korean levy authority stated in response to a taxation law inquiry about transfers of virtual asset airdrops by crypto exchanges that any free virtual asset transfer by crypto exchanges, including those made in the form of airdrops, staking rewards, and hard-forked tokens, would be subject to the gift tax.
According to a local news source, the gift tax will be “assessed on the third party to whom the virtual asset is given free of charge.”
The levy office said that free virtual asset transfers would still be subject to a 10–50% levy under the Inheritance and Gift Tax Act even though the virtual asset gains fee would now be applied to start in 2025.
According to the aforementioned tax, the beneficiary of the free “gift” must submit a gain levy return three months after receiving it.
However, the ministry also said that, given the absence of laws surrounding the virtual asset market, real taxes on such virtual asset transfers should be taken into account on a case-by-case basis. According to a government statement:
“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 it is a consideration or whether actual property and profits are transferred.”
The authorities have repeatedly delayed the virtual asset gains tax since there aren’t any regulatory norms in place.
Examining all different kinds of virtual asset transactions and creating a legal framework for them becomes rather difficult for them.
Consequently, it is difficult to understand the specifics of virtual asset contributions, even when taxes are charged.
