Thailand is the latest country in the Asia region to start levying taxes on cryptocurrencies, despite receiving some opposition from the Thai Blockchain associations. The news arrives as other countries in the region and around the world ramp up legal and regulatory efforts.
Value-Added Tax and Capital Gains
In early April 2018, Thailand’s Ministry of Finance released plans to tax cryptocurrency trading and investments. After a cabinet meeting in late March, Thai Finance Minister Apisak Tantivorawong responded to a letter sent by digital asset associations calling for the Deputy Prime Minister and government to “rethink the enforcement of a royal decree to regulate digital asset transactions — particularly the withholding tax, as it could be an obstacle to startup fund-raising,“ reports the Nikkei Asian Review.
The proposed 15% capital gains tax is considered by digital asset operators in Thailand to be a stifling figure for the industry. It puts financial pressure on startups seeking to break into the blockchain and cryptocurrency industry, which could hinder overall innovation in the country.
There is also a 7 percent VAT charged on all cryptocurrency trades in the country, which for would-be blockchain entrepreneurs and companies seeking to have digital money as part of their business model is very off-putting.
Subject to Change
With that said, it’s somewhat important to note that the Thai legislation is still in its infantile stages. Since 2014, France had laws in place that classified cryptocurrency profits as either industrial and commercial profits or non-commercial profits, which made them subject to an eye-watering 45% capital gains tax at the top end for residents in the highest tax bracket.
As of late April 2018, the French Council of State reclassified cryptocurrencies as “movable property.” This makes them akin to transportable assets such as vehicles, precious metals or intellectual property and brings the tax rate down to a flat 19%, which may be high but is still a definite advancement for blockchain industries and investors in France.
Other countries in Asia are also beginning to relieve crypto-tax pressures with nations such as the Philippines announcing a special economic zone for ten blockchain and virtual currency companies.
In Abu Dhabi, the Global Market’s Financial Services Authority released proposals for a “fit-for-purpose” regulatory and taxation framework. In a statement, Richard Teng Chief Executive of the Financial Services Regulatory Authority (FRSA), regulator of the Abu Dhabi Global Market (ADGM) said:
“The FSRA is seeking to instill proper governance, oversight, and transparency over crypto asset activities,” Adding further, he said, “Our proposed regulatory regime is only possible with our deep understanding and knowledge of the solutions available to address the respective risks and represents the most comprehensive regime proposed by global regulators so far.”
In Thailand, it is still early days and should the new tax laws prove too high for the country; there is a chance that the state will follow up on the original policies with further amendments, just like many other crypto-adopting societies in the world.