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- Crypto airdrops are the next target of South Korea’s law enforcement officers.
Experts believe that the taxation of airdrops is not that easy.
The crypto investors of South Korea got tensed in 2021 when the government planned to impose a 20% tax on the profits of crypto; till then, the supremacy postponed the plan till 2025. Now, the next target seems to be crypto airdrops.
Basically, Airdrops is a marketing tool utilized by crypto projects to simply influence clients and indulge in dropping tokens in the clients’ wallets, mostly free of cost. However, South Korea imposes a tax on that.
On Monday, The Ministry of Economy and Finance announced that airdrops come under the gift tax rule. But, according to the professor of tax accounting at Kyungbok University, Cha Dong-Joon, the implementation of the policy on digital transactions with private wallets would not be that easy.
In an interview, Dong-Joon stated that the ministry is just making a statement of aim. “Not less than two or three years, real taxes are morally not that easy,” he added. For one thing, tax authorities are not able to estimate the worth of crypto that remains unlisted on exchanges, he elaborated.
The professor of tax accounting at Hanyang Women’s University, Oh Mun-sung, agreed that the taxation of airdrops is not that easy.
Tax Chaebol
Some intellectual and tax specialists have advised that the policy was generated for many years with a certain group in mind: the super-rich families that run the country’s major combinations, including Samsung and Hyundai Motor Group, which are known as Chaebol.
In 1996, South Korea revised its policy to tax indirect gifts after Lee Jae-Yong, the current de facto head of Samsung, got 6 billion Korean won from his father, after that Lee Kun-hee, the chairman of Samsung, got. He compensated the gift tax on the funds and then invested once again the remaining in two, which were not listed subsidiaries under the company.
In 2004, the laws got stricter before Lee Jae-Yong acquired the company after his father got sick.
The tax law of the country needs an amendment to add cryptocurrencies, airdrops, and other digital assets, Cha mentioned.
“The right thing is to regulate these types of acts and develop the tax policies around them that South Korea fails to do so.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
