Thailand has put aside plans to tax cryptocurrency following heavy opposition and fears that the tax could stifle the growing industry. The Thai government had initially planned to implement a 15% capital gains tax on cryptocurrency traders and investors.
Cryptocurrency taxes are nothing new. Here in Australia, the ATO has been collecting capital gains tax (CGT) since May 2019. This year, the ATO has been warning crypto users to honour their tax obligations to avoid repercussions.
Tax Crypto as CGT to Regulate the Industry
In a joint statement issued last week by the Bank of Thailand (BOT), the country’s Securities and Exchange Commission (SEC), and the Ministry of Finance (MOF), Thai authorities had warned that using cryptocurrency as a medium of payment poses a threat to the country’s financial sector.
The use of digital assets in this manner could also pose further risks to consumers and businesses through price volatility, cybertheft, personal data leakage, or money laundering, etc. —Bank of Thailand
The authorities were thus exercising sovereign power to “limit widespread adoption of digital assets.”
Russia has also announced plans to ban cryptocurrency use and mining for the same reasons, citing fears of crypto’s price volatility and threats to its monetary policy sovereignty.
While the plans didn’t approach the universal ban implemented by China, both Thailand and Russia initially envisaged tough restrictions on crypto transactions, mining, and its use as a form of payment, but nothing on owning crypto.
In the plans, the Thai revenue collection office would tax crypto assets on CGT. It would also allow traders and investors to offset annual losses against gains made in the same year. It was not clear if crypto traders would self-report or exchanges would assist in the effort, as it happens here in Australia.
However, “The revenue department did a lot of homework and reached out to crypto operators as well to get feedback,” said Upbit chief executive Pete Tanruangporn.
Any Relation to Bitcoin’s Price Dip?
The crypto industry experienced rapid expansion in Thailand during the coronavirus pandemic. As early as December, Bloomberg reported that the government was seeking ways to reign in the crypto craze that has taken over the country.
Bloomberg further reports that turnover in crypto exchanges in the country had exceeded 221 billion baht or $9.46 billion AUD in November 2021. This is an increase from 18 billion baht from the year prior, showing an increased appetite for crypto as people seek to grow wealth and savings amid a tumbling economy.
The rising insecurity challenges in the blockchain and crypto industry have also contributed to this uneasiness. Some of the biggest ones include the Bitmarket hack, Cream Finance hack, and last year’s Polygon Network hack.
Just last week, a hacker also drained over 120k ETH from Wormhole, a Solana—Ethereum bridge.
Supporting the Development of Financial Technologies
The BOT and the revenue department had consulted with stakeholders in the crypto industry before announcing the proposed taxation measures. Accepting input from stakeholders until February 8, the authorities are treading cautiously after having previously suffered financial meltdowns in 1997-98.
The BOT reiterated its commitment to “support the development of financial technologies,” not willing to kill an industry that could also generate a lot of wealth for the economy. For now, plans to tax crypto in Thailand are down but not out.