Airdrops to be counted as gifts under tax legislation.
If you are in South Korea and you have received a crypto airdrop you could be taxed up to 50% of your earnings according to a South Korean government official.
Crypto initiatives use airdrops or token giveaways to entice initial sales. Users that participate in communities of projects that are in the beginning stages are usually given airdrops as gifts or as extra benefits from making an early purchase.
The purpose of an airdrop is to build excitement and hype as well and create a benefit for those that choose to jump in early. Other ways for users to gain access to airdrops are for completing certain tasks Such as following certain social media accounts, sharing information via tweets, adding friends to the project community, using the crypto to perform a transaction, or simply signing up for updates via mail.
Airdrops gain traction by promoting the project and from the continued sharing of information regarding the project. This bootstraps the projects and guarantees fair distribution of the token among the community, or that is the main idea anyway.
Last year the South Korean government made an announcement that stated inherited or gifted tokens under local inheritance laws would be taxed.This was reported on a coindesk article around that time. The tax authority interprets this to include airdrops. As a South Korean official stated in response to a reporter’s query on the matter, there is a gift tax in South Korea and this gift tax can be levied on those that receive tokens via airdrops. Within 3 months of the airdrop an individual must file a tax return and the tax will be around 10-50% and considered case-by-case.
Regulations on crypto are happening everywhere and South Korea is no exception as they plan to start taxing all crypto earnings by the year 2025 which includes a tax of 20% on annual gains exceeding $1860 USD.