Thailand
Thailand: Digital asset trading faces 7% VAT levy
Investors who make digital-asset-related trades will be liable for a 7% value-added tax (VAT), on top of the 15% withholding tax on capital gains and returns from such investments, when the new law is enforced. The series of levies is designed to discourage people from speculating in digital assets.
But retail investors will be exempt from paying the VAT if they trade digital assets through exchanges, said Finance Minister Apisak Tantivorawong.
It is unnecessary to enact an additional law to collect the VAT, he said, as the current law empowers the Revenue Department to do so.
The cabinet earlier this week approved in principle the drafts of two royal decrees, one to regulate digital-asset-related transactions and another to amend the Revenue Code to let the tax-collecting agency impose levies on digital assets. But the draft still needs to be vetted by the Council of State before being submitted to the cabinet for final approval next week.
Regulators are worried about the rising popularity of fund-raising through initial coin offerings (ICOs) and cryptocurrency trading, as no law governing these digital currencies can be used to protect investors and such digital assets can be used to launder money.
Digital assets are defined by the draft law as cryptocurrencies, digital tokens and other assets in the form of electronic data, as specified by the Finance Ministry. The amended Revenue Code also requires individual investors to include the capital gain and return from investment in digital assets in their assessable income in computing personal income tax.
For corporations, the withholding tax rate will be set in the ministerial announcement, Mr Apisak said.
Intermediaries will take responsibility for withholding the tax and sending it to the Revenue Department.
Mr Apisak said the government does not want to encourage cryptocurrencies, ICOs or any other digital-asset-related transactions, as it prefers promoting deposits and securities investment.
Those who raise funds through ICOs before the law goes into effect must seek approval from the Securities and Exchange Commission (SEC) within six months, he said, adding that the securities watchdog will also regulate brokers, dealers involved in digital asset trading and ICO issuers.
“With technology, we cannot chase [dealers] down, as their identities are hidden,” he said. “But we can track them at the fund-raising and trading level. We need to set out criteria requiring that they have licences, comply with the Know Your Customer (KYC) practice, identify the source of funds and set trading value. They must also report to the Anti-Money Laundering Office (Amlo).” Deputy Prime Minister Somkid Jatusripitak said the law would come into force this month, adding that completely limiting digital asset transactions is not viable. The law is aimed at keeping the digital asset business operating within legal bounds, he said.
The Finance Ministry, the Bank of Thailand, the SEC and Amlo will work to oversee digital asset trading and investment to prevent risks from snowballing, Mr Somkid said.
Source: https://www.bangkokpost.com/business/news/1428286/digital-asset-trading-faces-7-vat-levy