Thailand axes planned 15% cryptocurrency tax

Thailand has scrapped plans to impose a 15 per cent withholding tax on crypto transactions after facing pushback from traders in one of south-east Asia’s biggest markets for digital currencies.

Tax officials in the country said on Monday that people who earned income from cryptocurrency trading or mining could report these as capital gains on their income taxes.

The new rules, outlined in a manual published by Thailand’s revenue department, will also allow traders to offset their annual losses against gains made in the same year, meeting demands from those in the nascent industry who had warned that excessive tax would kill off a sector in its infancy.

Trading of bitcoin and other online currencies has expanded rapidly in Thailand during the coronavirus pandemic, which has hit the country hard in traditional industries including tourism — an area that generated about a fifth of GDP before the closure of the border to most international travel in 2020.

Crypto industry participants welcomed Monday’s announcement. “The revenue department did a lot of homework and reached out to crypto operators as well to get feedback,” said Pete Peeradej Tanruangporn, chief executive of Upbit, a crypto exchange, and co-chair of the Thailand Digital Asset Operators Trade Association. “It is much more friendly to both investors and the industry.” 

In a country that suffered a devastating currency and financial crisis linked to “hot money” flows in 1997-98, Thai regulators have been cautious in their approach to regulating crypto.

The Bank of Thailand, the country’s Securities and Exchange Commission, and its finance ministry last week announced plans to issue regulatory guidelines to restrict digital currency payments.

The bodies said that using digital assets to pay for goods and services “would not add much benefit to consumers and businesses”, but added they supported the development of financial technologies such as blockchain, and were not preventing investments in them.

They invited stakeholders to submit comments and suggestions until February 8.

Critics of the proposed measures have said they go too far. “Restricting crypto payments is unnecessary,” said David Carlisle, director of policy and public affairs with Elliptic, a digital asset research and analysis group. “With appropriate safeguards in place, merchants can accept crypto payments without posing excessive and broad risks that cause harm.” 

Thailand’s efforts to tax and regulate crypto come at a time when other countries in the region are moving to do the same. Indonesia last week barred financial institutions from facilitating or marketing crypto asset trading.

Singapore ordered crypto businesses to stop marketing or advertising their offerings to retail investors, describing digital assets as “highly risky and not suitable for the general public”. 

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