Thailand’s government has officially given a VAT exemption for cryptocurrency transfers. It is possible only for transfers made through government-approved exchanges. The tax deduction will last until the end of next year. The law will also apply to the Bank of Thailand issuing digital currency.
Thailand’s Royal Decree allows crypto transactions to be tax-exempt.
As per the new law, Investors who move cryptocurrencies and digital tokens will be eligible for a 7% VAT exemption on their transactions through Thai exchanges. As per a decree published in the Royal Gazette on Tuesday, the enactment of the tax break will change retroactively from April 1, 2022. As per reports in local media, this change will stay in effect until December 31, 2023.
The government approved the policy in March this year but it applies only to trading platforms registered within the Ministry of Finance. The judgment is now part of Thai law. It came into effect the day after being published in the official journal.
The primary goal of the tax exemption, according to the document, is to promote cryptocurrency trading on recognized exchanges. It allows crypto transactions to be regulated and supervised by appropriate authorities, for example, the Securities and Exchange Commission (SEC).
Thailand’s Finance Minister, Arkom Termpittayapaisit, is confident that the country’s cryptocurrency exchange will become more dependable and stable due to the reduced tax restrictions. He’s also been quoted saying, “This would encourage Thailand to have an infrastructure and payment system that would be ready for the future digital economy.”
Ekniti Nititthanprapas, Director-General of the Revenue Department, noted that crypto trading would be easier for investors who benefit from fair tax treatment and secure transactions. While on the other hand, Thailand’s reputation in the global online sector will strengthen.
Another royal decree on May 24 reported on the VAT exemption to transfers utilizing Thailand’s monetary authority’s retail central bank digital currency (CBDC). In December, the Bank of Thailand said it plans to begin testing the CBDC as an optional payment method in late 2022 in transactions involving financial institutions and customers.
Thailand, in recent times, has seen a substantial increase in cryptocurrency investment and trade. The country’s financial regulators made efforts to prohibit the usage of cryptocurrencies for payments towards the end of March. They cited the need to avert different financial and economic concerns. The SEC announced guidelines to deter digital asset operators from offering such services. The Bank of Thailand’s retail CBDC project will begin pilot testing later this year.
The Thai government has also postponed plans to impose a 15% capital gains tax, allowing traders to balance any annualized losses from crypto investments with unrealized profits. Thailand’s government has also canceled 15% withholding tax proposals on crypto transactions earlier this year after public outrage. In Thailand, however, crypto is still prohibited as a form of payment.
Overall, Bitcoin is the most widely used cryptocurrency in Thailand. Like other parts of the world, cryptocurrency is also gaining popularity in Thailand. Thailand’s digital assets are developing rapidly and the trading accounts are increasing from 170,000 in January to almost 2 million by the end of 2021. We have to see how this decision of tax deduction changes the crypto market and benefits Thailand’s economy in the long run.