Thailand Offers Crypto Tax Break to Promote Investment Tokens

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Thailand approved a crypto tax break for individuals holding investment tokens on March 13 to encourage the use of these tokens for fundraising purposes.

Capital gains from such holdings are now exempt from personal income tax calculations, even if a 15% withholding tax was previously applied.

Thailand Approves Crypto Tax Break

According to reports from the Bangkok Post on March 13, Thailand’s cabinet endorsedthe crypto tax break, allowing individuals profiting from holding investment tokens to exclude this income from personal income tax calculations, provided a 15% withholding tax has been deducted.

Kulaya Tantitemit, Director-General of Thailand’s Revenue Department, emphasized that the tax measures, effective since January 1, are designed to foster fundraising through investment tokens and position the country as an investment hub. The initiative is anticipated to stimulate economic growth, bolstering investment and employment opportunities in the region.

However, the approved crypto tax break will apply solely to individuals refraining from seeking full or partial refunds of the deducted tax or claiming a deducted tax credit. In addition to individual investors, the Thai government has extended tax incentives to investment token issuers. Corporate income tax and value-added tax (VAT) for these issuers have been waived, as announced on March 7. 

Deputy Government Spokesman Rachada Dhnadirek highlighted that this move provides firms with an alternative fundraising avenue, complementing traditional methods. The government anticipates that investment tokens will inject approximately $3.7 billion into the economy over the next two years.

Thai Revenue Department’s Crypto Taxation Plans Face Industry Scrutiny

The Thai Revenue Department’s efforts to tighten oversight and impose taxation on cryptocurrency trading have encountered pushback from industry stakeholders, who warn that heavy taxation could hinder the burgeoning sector’s future development.

Initially announced by the Thai Finance Ministry in January, the proposal to tax the crypto market raised practical challenges. It remained to be seen whether taxes would be imposed on yearly reports or if exchanges would be mandated to deduct them at the source.

In January 2022, the government introduced a 15% capital gains tax on crypto traders, prompting significant public backlash. Responding to opposition, the implementation of the tax was swiftly suspended on February 1, 2022.

Meanwhile, regulatory bodies in Thailand, including the Bank of Thailand, the Ministry of Finance, and the Securities and Exchange Commission, announced plans to devise regulations for specific digital assets deemed non-threatening to the financial system.

Amidst evolving policies, Thailand demonstrated a more nuanced approach to crypto taxation, exempting traders on authorized exchanges from a 7% value-added tax (VAT) on crypto transactions on March 8, 2022.

Since then, Thailand has undertaken various initiatives to foster a crypto-friendly environment. Recently, the country’s Securities and Exchange Commission (SEC) approved the launch of spot Bitcoin exchange-traded funds (ETFs) by asset management firms, mirroring trends in the U.S., where such ETFs have attracted substantial institutional investments.

Anticipating positive outcomes, the Revenue Department expects the tax exemption policy to drive approximately 18.5 billion baht in investment token fundraising in 2024 alone. This expected surge in capital inflows is hoped to stimulate economic activity, facilitating business expansion, job creation, and overall economic growth in Thailand.

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