Criticism over newly introduced legislation mandating taxes on cryptocurrency transactions has seen Thailand’s tax authority waive a value-added tax (VAT) on individual cryptocurrency adopters.
First drafted in mid-March, a governmental decree to fast-tracked legislation that enforced taxes on cryptocurrency-related investments came into effect this week on Monday. In announcing the government’s proposed tax framework for cryptocurrencies – encompassing all retail trading and returns on investments – Thai finance minister Apisak Tantivorawong previously revealed investors will be required to pay 7% in VAT as well as a 15% capital gains tax on returns.
However, while addressing media during a press conference on Tuesday, Thailand Revenue Department’s director of legal affairs Saroch Thongpracum said the authority would issue a new regulation to wave the 7 % VAT on individual investors in order to reduce their tax burden, according to The Nation.
Despite the tax relief, the official reminded that individuals will still be liable to pay a 15% capital gains tax, deemed ‘withholding tax’, on income earned in a transaction.
Curiously, the report also suggested that adopters will only see tax relief on transactions if they transact on cryptocurrency trading platforms approved by authorities.
An excerpt from the report read:
The Revenue Department will waive value-added tax for people trading in cryptocurrencies on exchange markets approved by the Securities and Exchange Commission (SEC).
Further, the official added that the tax authority would ‘revise tax regulations’ for private firms trading cryptocurrencies. As things stand, both private companies and individual investors are subject to income tax on cryptocurrency transactions.
The new law also mandates that private companies launching ICOs will be liable to pay corporate income tax on the finances raised from the fundraising. This is in stark contrast to private companies issuing initial public offerings of their shares wherein they are not subject to taxes.
The tax policy has seen accusations of bias against ICO-related fundraisings ahead of new SEC regulations related to fundraising via initial coin offerings, expected sometime next month.
SEC secretary-general Rapee Sucharitakul added that a ‘public hearing’ into the new regulations will be held on Monday in a consultation period that is expected to last two weeks before detailed regulations are established in June.
“The new regulation aims to provide protection for general investors since only investors who have knowledge of ICO issuance or digital-asset transactions should be allowed to engaging in this kind of trading.”
Further, a second degree dubbed the ‘digital asset law’ that establishes the SEC as the authority regulating cryptocurrency and ICO transactions mandates ICO portals, brokers and traders to ‘obtain licenses’ from the Finance Ministry, the report suggested.
“Investors have to trade or deposit their cryptrocurrencies with those who obtains the relevant licences from the SEC,” a Finance Ministry spokeswoman added.