The tax law has been interpreted by the South Korean Ministry of Strategy and Finance as the airdrops of virtual assets may also come under the liability of gift tax. On the 22nd of this month, the Ministry of Strategy and Finance mentioned that the authorities have recently answered the tax law explanation review. It was regarding if a virtual asset issuing institution offers the same or different kinds of digital assets to a participant who possesses a particular virtual asset, that counts to be a transfer that is liable to gift tax.
South Korean Ministry of Proposes Implementing Gift Tax on the Airdrops of Virtual Assets
The assets’ free transaction is considered to be a gift in line with the Gift Tax Act. In the respective scenario, a gift tax is to be charged on the entity that is being given the respect virtual assets without any charges, the Ministry stated. In the free transfers of virtual assets, airdrops are included – which recompense unique virtual assets to the entities who possess particular virtual assets in line with the investment ratio and make virtual asset deposits in a network of blockchain.
There exists are staking where the reward takes into account the payment in virtual assets. For instance, if a virtual asset-based payment has been obtained by an investor of virtual assets in an airdrop as a reward from some exchange, this implies that the gift tax applies to the respective receiver. As per the tax-related authorities, the implementation of the capital gains taxation on virtual assets will start from 2025, however, the law related to the gifts in virtual assets is even now implemented.
The reason behind the respective move is that the gift tax is thoroughly charged on the entirety of the things that have some economic worth that can be transformed into money. In addition to this, the respective tax is also enacted on the whole de facto and legal rights having property values and economic advantages. An individual who intends to recompense gift tax requires to submit a gift tax yield for three months following the month in which the date of the gift belongs. The percentage of the tax is nearly 10 to 50% of the worth of the received gift.
Gift Taxation on Virtual-Asset Airdrops Is Quite Difficult
A tax industry official stated that while dealing with virtual assets-based gifts, taxation is an obvious principle. Nonetheless, the status of the authorities in the enforcement of the taxation is that each case should be dealt with separately. In the words of the Ministry of Strategy and Finance, if a particular transfer of virtual assets is liable to gift tax is an issue to be taken into consideration in line with the situation of the transfer.
Apart from that, to eliminate the airdrops and other such things from the liability of the gift tax, a necessary thing is the reinforcement of the system via additional legislation. It is thought to be problematic for the authorities dealing with tax to gather the particulars of the donations done in virtual assets, even when there is an enactment of taxes.
