The Finance Ministry of Thailand has announced the exemption of value-added tax (VAT) on domestic crypto asset trading. It is the latest push to make the Kingdom more crypto-friendly, though uncertainty and hurdles remain for overseas investors.
On February 7, the Bangkok Post reported that the secretary to the finance minister, Paopoom Rojanasakul, said the ministry wants to promote digital assets as a new alternative tool for fundraising.
Thailand Drops Crypto VAT
Therefore, the newly appointed government has eased tax rules. It has suspended the requirement to pay 7% VAT on income derived from cryptocurrency trading. Moreover, the tax exemption was effective on January 1, 2024, with no expiration date, according to the report.
Transfers of crypto assets or “digital investment tokens” to third parties have been exempt from VAT in Thailand since May 2023.
Additionally, the VAT exemption applies to regulated crypto exchanges, brokers, and dealers under the supervision of the Thai Securities and Exchange Commission.
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The Post also noted that the Thai Finance Ministry and SEC are in the due process of amending the 2019 Securities and Exchange Act to enable digital investment tokens to resemble securities.
The report commented on the growth of Thailand as an offshore crypto hub:
“Since Thailand has grown to become one of the top jurisdictions for offshore digital asset investors, the new tax policies could potentially provide the necessary boost to further expand the country’s digital asset market.”
Overseas Crypto Income Tax Uncertainty
In September, the government issued a new order targeting crypto and stock traders. It stated that overseas income derived from crypto trading (among other things) would be subject to personal income tax if bought into the Kingdom.
The ruling came into effect on January 1, 2024. It sparked concern and confusion due to a lack of clarity on how income and earnings will be assessed and taxed.
Additionally, investors were left in limbo in January following mixed messages from the SEC regarding spot Bitcoin ETFs following their launch in the US.
Moreover, it is becoming increasingly difficult for non-Thai investors to access local exchanges. Binance opened an exchange in Thailand in January. However, it blocked foreigners from opening trading accounts because they cannot obtain a national digital identity.
Thailand appears to be making all the right moves to foster a vibrant domestic crypto market. However, it seems foreign investors are being left out in the cold.