Thailand has canceled plans to impose a 15% withholding tax on crypto transactions after facing repulsion from traders in one of Southeast Asia’s largest digital currency markets.
The country’s tax officials said on Monday that people who have earned income from cryptocurrency trading or digging can account for this as capital gains on their income taxes.
The new rules, outlined in a handbook published by Thailand’s revenue department, will also allow traders to offset their annual losses with profits made in the same year, meeting the demands of those in the nascent industry, who warned that excessive taxes would kill a sector in its infancy.
Trade in bitcoins and other online currencies expanded rapidly in Thailand during the coronavirus pandemic, which hit the country hard in traditional industries, including tourism, an area that generates about a fifth of GDP before closing the border for most international travel in 2020. .
Crypto industry participants welcomed the announcement Monday. “The Revenue Department has done a lot of homework and contacted crypto operators to get feedback,” said Pete Peeredei Tanruangporn, CEO of Upbit, cryptocurrency exchange and co-chair of the Trade Association of Digital Asset Operators in Thailand. “He is much more friendly to both investors and the industry.”
In a country that suffered a devastating currency and financial crisis due to hot money flows in 1997-98, Thai regulators are cautious in their approach to cryptocurrency regulation.
The Bank of Thailand, the country’s Securities and Exchange Commission and its finance ministry last week announced plans to issue regulatory guidelines to limit payments in digital currency.
Authorities said the use of digital assets to pay for goods and services “will not add much benefit to consumers and businesses”, but added that they support the development of financial technologies such as blockchain and do not hinder investment in them.
They invited stakeholders to submit comments and suggestions by 8 February.
Critics of the proposed measures say they go too far. “Restricting crypto payments is unnecessary,” said David Carlisle, director of policy and public affairs at Elliptic, a digital asset research and analysis group. “With appropriate safeguards, merchants can accept crypto payments without creating excessive and widespread risks that cause harm.
Thailand’s efforts to tax and regulate cryptocurrency come at a time when other countries in the region are moving to do the same. Last week, Indonesia banned financial institutions from facilitating or offering cryptocurrency trading.
Singapore has ordered crypto companies to stop offering or advertising their offers to retail investors, describing digital assets as “high risk and unsuitable for the general public”.
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