Cryptocurrency tax rates for trading and investing have been proposed by Thailand’s Ministry of Finance as part of a larger effort to appropriately regulate and tax the crypto industry within the country, according to a new report from Nikkei.
In a March 27 Cabinet meeting, Thai Finance Minister Apisak Tantivorawong announced that the government had finalized a tax framework that will comprehensively cover all crypto trading and investing practices. According to Tantivorawong, crypto trades will be taxed seven percent VAT and returns on investments will be subject to a 15 percent capital gains tax.
The new regulations have been several months in the making. By mid-March, Thailand’s executive branch moved to approve two drafts of the same regulatory framework. An effort to quickly finalize the drafts was reportedly made on the part of Thailand’s Deputy Prime Minister Wissanu Krea-ngam, who had called for the government to “comprehensively regulate” crypto.
Ambiguous history – ‘draconian’ future?
The Nikkei report announcing the new tax law may stifle industry growth and discourage investors from participating in crypto businesses based in Thailand. Korn Chatikavanij, former finance minister and current chairman of the Thai Fintech Association, said that regulators “have to be cautious not to allow their conservative instincts to result in draconian regulations.”
The report added that many startups are choosing Singapore over Thailand for building blockchain startups because of its friendlier regulatory climate.
In the past, Thailand has seemingly taken a somewhat opportunistic attitude toward the crypto industry. In September, Thailand’s SEC took a seemingly bullish attitude toward ICOs, announcing that it “encourages access to funding for business, including high potential tech startups, and realizes the potential of ICO in answering startups’ funding needs.”
At the same time, however, the TSEC acknowledged that there were “some cases” in which ICOs and cryptocurrency are used in fraudulent activity. The Commission stated that “to strike a balance between supporting digital innovation and protecting investors from potential ICO scams, Thailand’s SEC is considering appropriate approaches on ICO and welcomes comments and suggestions from the private sector.”
Following the announcement of the new tax rates, as well as the Thai central bank’s ban on bank-crypto interactions, however, many investors and entrepreneurs are questioning what “balance” really means in this circumstance.
For example, according to a report by Cryptona, blockchain startup Six.network launched its ICO in Bangkok, but has since registered in Singapore.
However, all hope is not lost. Natavudh Pungcharoenpong, a co-founder of Six.network, said that his company is currently collaborating with the TSEC to see if there is a future for the startup in Thailand. “The company has already approached the office to constantly clarify the operation to ensure transparency,” he announced at his company’s ICO launch.