Thailand Joins the Few Countries Offering Crypto Tax Breaks

Thailand has announced a significant tax exemption for cryptocurrency traders in a bid to position itself as a leading hub for trading digital assets in Asia.

The decision exempts traders from the 7% value-added tax (VAT) on earnings derived from trading cryptocurrencies and digital tokens, as reported by local news outlets.

The Finance Ministry, under the guidance of the finance minister’s secretary Paopoom Rojanasakul, has expressed intentions to encourage the growth of the digital asset sector to fuel the country’s digital economy.

What was originally a temporary exemption was set to expire at the end of 2023, but it now has no expiry date, and is retrospectively applied back to January 1, 2024.

This makes it permanent for transactions conducted through Thailand’s licensed digital asset exchange operators, including trades done by licensed brokers and dealers.

Table of Contents Table of Contents

1. Key Takeaways
2. Thailand Lowers Cost Barrier for Crypto Traders
3. Thailand Amends 2019 Securities and Exchange Act
4. Mixed Crypto Tax Landscape
5. The Bottom Line

Show Full Guide

Table of Contents

1. Key Takeaways
2. Thailand Lowers Cost Barrier for Crypto Traders
3. Thailand Amends 2019 Securities and Exchange Act
Show Full Guide
4. Mixed Crypto Tax Landscape
5. The Bottom Line

Robert Quartly-Janeiro, chief strategy officer at crypto exchange Bitrue, told Techopedia that the push for looser crypto tax policies by Arkhom Termpittayapaisith, the country’s Minister of Finance, is “a serious attempt to develop a domestic digital asset hub that could compete regionally.”

“If the government and Minister Termpittayapaisith can realize the strategy, particularly for institutional and asset management trading, this is a big signal to attract firms, investors, and greater adoption, so long as the underlying infrastructure is there,” he added.

Thailand Lowers Cost Barrier for Crypto Traders

By removing the VAT on crypto transactions, Thailand significantly lowers the cost barrier for each trade, making digital assets more accessible to a wider audience.

This policy is part of Thailand’s broader efforts to attract crypto investment and stimulate economic growth, particularly following a challenging year marked by a slowdown in goods exports and the adverse effects of the Covid-19 pandemic on its tourism industry.

“Thailand is taking a decisive step to assert itself as a global center for digital assets by extending the exemption from Value Added Tax (VAT) on cryptocurrency trading,” Sergio S, CEO and co-founder of crypto market-making service provider Coinrate, said in a comment.

“This move significantly enhances the country’s attractiveness to crypto investors and traders, reducing financial barriers and stimulating market activity.”

Sergio added that eliminating the 7% VAT on profits from cryptocurrency trading makes Thailand “one of the most welcoming places for cryptocurrency business, encouraging investment growth and trading volumes.”

He noted that the policy also includes brokers and dealers regulated by the Securities and Exchange Commission, which creates a favorable environment for the entire digital asset ecosystem.

Thailand Amends 2019 Securities and Exchange Act

To further cement its status as a digital asset hub, Thailand is considering amendments to the 2019 Securities and Exchange Act, spearheaded by the Finance Ministry and the Securities and Exchange Commission (SEC) of Thailand.

Last month, the SEC eased some restrictions on investing in digital tokens, such as lifting investment limits on digital tokens backed by real estate or generating real estate income streams, as well as those with infrastructure operations or revenue streams.

The regulator also reviewed the criteria for establishing custodial wallet provider businesses, enabling them to offer services to digital asset business operators.

Thailand’s improving regulatory stance toward crypto has already caught the attention of some big players in the industry.

Just recently, Binance unveiled its joint venture crypto exchange Binance Thailand. Abbreviated as Binance TH, the exchange provides a platform for digital asset exchange services with Thai baht trading pairs.

“Thailand is not only reinforcing its status as a hub of innovation and investment in the cryptocurrency field but also fostering the development of the technology sector by attracting startups and fintech companies,” Sergio said.

Mixed Crypto Tax Landscape

The landscape of cryptocurrency taxation remains complex and varies significantly across the globe. Some countries have embraced the taxation of cryptocurrencies, treating them akin to traditional assets like stocks and real estate, while others have taken a more friendly approach.

For instance, Malta and Portugal offer attractive tax regimes for digital assets. More specifically, Malta does not impose capital gains tax on long-term crypto investments while Portugal exempts crypto profits from tax for individuals who have held their investments for more than a year.

On the other hand, Scandinavian countries are known for their high-income tax, and Denmark is a prime example. Danish taxpayers pay an average of 45% of their income in income tax, which includes crypto earnings.

Meanwhile, the United States has taken a detailed approach to crypto taxation. The IRS categorizes cryptocurrencies as property, subjecting them to capital gains taxes.

The tax rate depends on the holding period of the asset. Short-term capital gains are taxed at the individual’s income tax rate if the asset is held for less than a year, while long-term gains attract lower rates, ranging from 0% to 20% based on the investor’s annual income.

The Bottom Line

As the world grabbles with how crypto and blockchain fit into the world, both from a technology angle and as investment tools, countries around the world are deciding how to tax crypto in different ways.

Thailand’s tax exemption signals an attempt by the government to make the country a crypto-friendly digital hub and will certainly appeal to speculators and investors — perhaps even to projects.

For now, Thailand makes itself an attractive place for those within the industry, and those speculating on it.