South Korea is looking to impose a new sort of tax on cryptocurrencies. The East Asian country has remained on the news within the crypto space of late as it seeks to institute proper regulation of the nascent industry. Most recently, the South Korean government has been considering imposing taxes on crypto airdrops.
Taxes on airdrops could range from 10% to 50% of the asset’s value
Yonhap News Agency, a local news outlet, reported the development on Monday. The South Korean Ministry of Strategy and Finance decided to add extra meaning to existing tax law. This prompts the government to look at the law in a new light.
The South Korean government revealed plans to tax inherited or gifted digital assets in December last year. To properly implement this, the authorities would ascertain the price of the gifted asset the month before and after it was gifted. This evaluation would be done through four different exchanges. Afterwards, the government will tax the gifted or inherited digital asset based on their average cost.
Notwithstanding, the recent review of this law will include valuable airdrops. If the government considers it, the law could slash anywhere from 10% to 50% of the airdrop’s value. The recipient of the airdrop will bear the tax. Additionally, any individual obliged to pay a gift tax must file a tax return within three months from the end of the month the gifted asset was received.
South Korea recently restricted access to 16 unlicensed exchanges
The Ministry of Strategy and Finance noted that the sort of transaction involved would determine whether a digital asset will be subject to a gift tax or not. Regarding taxing digital assets as gifts, the Ministry highlighted the difficulty it currently faces. This is due in large part to “insufficient infrastructure.” Also, the fact that some transactions do not have legal bases plays a role.
The South Korean authorities have been relentlessly trying to implement efficient regulations in the crypto industry. This also means being on the lookout for scams and frauds—an exercise recently proven to be of utmost significance.
A few days back, South Korea revealed plans to block access to unregistered crypto exchanges. The Financial Services Commission identified 16 crypto entities operating within the country without adequate licensing. The FSC asked the proper bodies to restrict local access to the sites.