By George Ward
Thailand’s administration is capitalizing on expanding the digital asset sector by authorizing tax exemption for investment token issuers. The country’s cabinet has given the green light to exempt companies that issue investment tokens from value-added tax (VAT) and corporate income tax.
Thailand Expects $3.7B From Investment Token Offerings
On Tuesday, Rachada Dhnadirek, a deputy government spokesman, revealed that companies will now have the opportunity to utilize alternative methods of raising capital via investment tokens. This adds to the already existing traditional avenues, such as debentures.
In addition, Dhnadirek stated that the administration anticipates investment token offerings to produce 128 billion Thai baht (about $3.7 billion) within the next 24 months. However, the government has estimated a potential loss of tax revenues amounting to 35 billion baht (about $1 million).
Over time, Thailand has made concerted efforts to clarify taxation regulations relating to cryptocurrency, including the proposal of a 15% tax on crypto capital gains for investors last year. However, the administration ultimately abandoned these plans and exempted crypto traders from paying the 7% VAT on licensed crypto exchanges several months later.
According to reports, Thailand’s finance ministry has relaxed its cryptocurrency tax regulations to encourage investment in the crypto asset sector. Additionally, the updated tax policy enables traders to offset their yearly losses against gains from their cryptocurrency investments.
This move provides traders with a significant sense of relief, particularly since most governments presently tend to tax gains while disregarding the losses caused by market volatility. The 7% tax exemptions became effective in April 2022 and remain in place until December 2023.
Moreover, the government’s tax policy introduced in 2022 promises that investors who commit to investing in crypto startups within the country for a minimum of two years are eligible for tax exemptions for about ten years.
Crypto Regulation In Thailand
Last year, domestic regulators were also actively pursuing more comprehensive cryptocurrency regulations. This included the ban on the use of cryptocurrencies for payments by Thailand’s Securities and Exchange Commission (SEC) in March 2022.
Meanwhile, this recent development coincides with ongoing efforts by the Thai SEC to establish stricter cryptocurrency regulations to safeguard investors. At the beginning of 2023, the financial regulatory body unveiled new regulations for crypto custody services, mandating that all crypto custodians must have an emergency plan to address unexpected events.
In addition, the new regulations comprise three critical provisions, such as the need to provide policies and guidelines to oversee the risk management of private keys and digital wallets. The rules necessitate that VASPs engage with regulators regarding these policies and provide an action plan for compliance.
Moreover, the SEC has requested that crypto custodians offer policies and procedures for creating and managing digital keys and wallets. Furthermore, the regulatory authority mandated crypto custodians to create a contingency plan to deal with unexpected events that could affect the wallet management system.