South Korean tax authorities have issued tax bills to recipients of the recent Bithumb Airdrop, prompting the exchange to respond with measures to facilitate return of the tokens.

South Korean crypto enthusiasts who received airdrop tokens and prizes from the Bithumb exchange between 2018 and 2021 may face unexpected tax bills. Hanguk Kyunjae reported that Bithumb has pledged to cover the tax burden incurred by its customers following a Taxation Authority order. However, the exchange disputes the National Tax Service's (NTS) retrospective taxation policy.Bithumb customers have been instructed to pay approximately $30 million in taxes as a consequence of receiving airdrop rewards and participating in cashback-style promotions. The NTS estimates that the exchange distributed roughly $61 million worth of assets to South Korean residents during the 2018-2021 period.The unexpected tax bills have surprised many, especially as South Korea does not currently tax crypto-related profits. Nonetheless, winners of lotteries and similar events are required to declare and pay taxes on their winnings, which are categorized as "other income." Residents must pay 22% of their winnings for prizes exceeding approximately $37.Bithumb reported that 10,700 of its users were notified to pay a total of $15 million in taxes in the previous year. This marks the first instance of the NTS taxing South Korean airdrop recipients.To alleviate the burden on its customers, Bithumb announced its intention to compensate them for any taxes they have been compelled to pay. However, the exchange has also filed a tax appeal against the NTS, claiming that virtual assets and commission cashback distributed during events are exempt from taxation.Bithumb argues that these items are akin to free gifts or sales benefits, echoing the practices of securities providers and retailers who often offer gifts to new account holders or high-spending customers. Tax experts suggest that the outcome of the appeal will depend on the nature of the giveaway event.While the outcome of the appeal remains uncertain, it may take several years for a ruling to be reached. Bithumb's attempt to become the first South Korean crypto exchange to list on the nation's stock exchange coincides with these tax-related developments.