Thai Ministry of Finance Establishes Tax Regulations on Digital Tokens and CryptocurrenciesApril 5, 2018
Thailand’s Finance Minister, Apisak Tantivorawong, announces that the government is seeking to regulate the crypto environment and sets tax framework for cryptocurrency investments and trading on March 27, 2018. Such news came out immediately after a cabinet meeting held each week.
The increasing popularity and rapid expansion of cryptocurrency become a threat for the government. The crypto industry has amazing pace of development and lacks the necessary regulations. Although the progress can’t be stopped, governments worldwide are considering various ways to avoid financial crimes in the market. The crypto world has a lot of offer to the black market, including tax evasion and money laundering. In order to avoid this from happening, the military government of Thailand recently made a huge step towards regulating the crypto sphere.
The tax regulations on the digital tokens and cryptocurrencies will cover the entire crypto investing and trading practices. The regulations have been in the process of development in several months. The taxes include fifteen percent capital gains on the returns and seven percent VAT on all crypto transactions or trades.
The decision of the military government of Thailand is viewed to be a conservative one. Nonetheless, it gained support from the society’s influential representatives. According to the Chairman and former finance minister of the Thai Fintech Association, Korn Chatikavanij, they need to be very careful not to let their conservative character to lead to draconian regulations.
It has not been a big surprise for the government to announce the tax framework on cryptocurrency. It’s noted that in February 2018, the central bank of Thailand made a decision to ban local banks from trading and investing in cryptocurrencies. Thus, the country’s crypto society lost the confidence in the future of such sphere in Thailand.
The Thai cabinet has mainly approved two drafts of royal decree, which aims to regulate crypto transactions and impose taxes on capital gains from cryptocurrency investments. Prior to its approval into law, the drafts must be carefully reviewed and vetted by the Council of State of Thailand. It consists of several qualified law councilors with expertise in areas including social sciences, economic, law and more.
In addition, the royal decree drafts will be formally discussed and reviewed by Thailand’s financial authorizes. These include the Bank of Thailand, the Anti-Money Laundering Office, the Finance Ministry and the Securities and Exchange Commission.
While the tax regulations in the country are becoming strict, an increasing number of startups now prefer to be officially registered in Singapore. This country has been attracting progressive projects from Thailand and created a crypto-friendly environment. South Korea also deserves a special mention. It has attracted a lot of attention with its decision on the crypto regulations. South Korea plans to follow Thailand’s example and also established tax framework for cryptocurrencies.
The decision of the military government of Thailand is controversial. This may result in a major brain drain among the society of cryptocurrency. However, ignoring the fact that the industry is attractive millions of dollars without regulations may damage the country’s economy.