As cryptocurrencies continue to gain prevalence, countries around the world are forced to develop new tax frameworks. Following suit, Thailand has recently released its own framework. Thai Finance Minister, Apisak Tantivorawong, announced the updates on March 27.
Following a cabinet meeting, it was revealed by Mr. Tantivorawong that all cryptocurrency trades would be taxed with a seven percent value added tax. in addition, all related returns would be taxed with a fifteen percent capital gains tax. The updated tax framework is consistent with the the first draft, which announced on March 14 that the tax ceiling would hover around fifteen percent.
The long-awaited framework is readily welcomed, as cryptocurrency investments and trading were all but frozen in Thailand. Back in February, the Thai Digital Asset Exchange paused Initial Coin Offerings, halting cryptocurrency activity in the country. In the same month, Thailand’s central bank warned against the use of cryptocurrency due to lack of precedent.
The Thai Finance Ministry developed the tax framework with clear goals in mind. Namely, Mr. Tantivorawong hoped to limit the use of cryptocurrency in practices of money laundering, tax evasion, and other criminal actions. However, critics point that the Thai government’s tendency of conservatism may staunch economic growth in the new, yet seemingly permanent, field of cryptocurrency.
Those criticisms may hold true concerning the policies of neighboring countries. Singapore boasts relatively lax cryptocurrency regulation, possible explaining why Thai businesses such as Six.network register in Singapore despite being based in Bangkok. Thai moves towards regulation further promote Singapore’s stronghold in the industry.
Moving forward, Initial Coin Offerings have been given a six month window to comply with the new regulations and any future updates. The fate of cryptocurrency in Thailand is still a mystery, and ongoing shifts to regulations can be expected. The Thai government can be expect to review these changes and adjust based on market responses, as well as policies created by other governments in the Association of Southeast Asian Nations (ASEAN).