You will be surprised to know that the South Korea Gift Tax policy now extends into the cryptocurrency domain. Want to know how and why? Well, we have curated the important points and information about the move.
Overview Of South Korea Gift Tax Policy On Crypto
On Monday, August 22, 2022, the South Korean Ministry of Economy and Finance cleared that the digital asset or cryptocurrency airdrops, staking rewards, and even hard-forked tokens would be entitled to pay a gift tax. This tax policy is not a new crypto regulation a part of the Inheritance and Gift Tax Act.
The government officials mentioned that even though the country postponed the crypto gains tax policy to 2025, levying such a policy on free coins or other such rewards was necessary at the moment. This is because the country officially considers cryptocurrency to be a virtual asset. Therefore, the implementation of the South Korea Gift Tax policy on crypto was inevitable.
A local news portal reported that the gift tax will be:
“Levied on the third party to whom the virtual asset is transferred free of charge.”
The tax authority of South Korea mentioned that though the crypto gains tax would be charged from 2025, the free virtual asset transfers will be subject to about 10% to 50% of the tax. The Inheritance and Gift Tax Act requires the receiver to file a gift tax return three months after receiving any digital asset as a gift.
The regulators also mentioned that the actual taxes would be charged on a case-to-case basis due to the absence of proper virtual asset regulations. The ministry in a statement wrote that:
“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.”
Moreover, we can also expect that the country’s virtual asset gains tax implementation in 2025 might alter the gift tax policy existing today. It seems that the country is acing towards regulating the crypto space in their periphery. Earlier, South Korea made its first arrests in a cryptocurrency-linked case, which was another notable development.