Thailand has decided to suspend the implementation of its 15% cryptocurrency capital gains tax after traders in the nation expressed strong opposition, the Financial Times reported.
Earlier this January, the Finance Ministry announced that profits from cryptocurrency trading are now subject to a 15% capital gains tax.
Required taxpayers are defined as those who gained from cryptocurrencies, including investors and mining operators, while digital asset exchanges are exempt from such duties. To avoid legal penalties, investors are advised to identify their cryptocurrency income when filing taxes this year.
The Thai Revenue Department also plans to intensify its monitoring duties following the substantial increase in the size and value of the digital asset market in 2021. Taxes can be collected from crypto trades since profits from such transactions are considered assessable income under Section 40 of Royal Decree amendment No.19 Revenue Code.
However, Thailand’s cryptocurrency proposal triggered a lot of opposition, with crypto traders in the country believing the tax to be excessive. Industry stakeholders have issued dire warnings that heavy taxation may severely impede growth in the emerging industry.
One of the questions about the crypto tax implementation is if the taxes would be levied on yearly reports or whether the government will force exchanges to deduct them at the source.
Akalarp Yimwilai, co-founder and chief executive of Zipmex Thailand, said that among the questions still being debated are methods of calculating profits and whether an increase in prices is considered a profit especially when the US dollar strengthens. Zipmex is one of the leading digital asset exchanges in the Asia Pacific with operations in Thailand, Indonesia, Singapore, and Australia.
“Tax methods and calculations should be more concise, clear, and easy to understand. Many people I know want to pay taxes, but don’t know how to calculate them,” said Akalarp.
“As an exchange provider, Zipmex has been working to develop a system to help our customers calculate profits and losses, but it’s very difficult. If the Revenue Department really has such an advanced data analytics system that it can precisely calculate gains from cryptocurrencies, it would be a great benefit to share it with the industry.”
Tipsuda Thavaramara, former deputy secretary-general of Thailand’s Security and Exchange Commission (SEC) said, “Whether policies focus on the promotion of trade industry or not, the Revenue Department should collect taxes fairly under clear rules and practices.”
As a result of crypto payment services charging capital gains tax from customers, this taxation would result in complications in the retail payment sector, according to Thavaramara. She also cited Singapore and Australia as examples of countries that have exempted crypto from value-added tax regulations and called upon the revenue department to follow the same to promote crypto usage.
The cryptocurrency market has been the subject of discussions among several nations, particularly South Korea. Due to a lot of opposition, the South Korean government has delayed implementing its crypto tax plan until 2023.
In Southeast Asia, all ASEAN member countries allow cryptocurrency trading with only Singapore imposing a tax for those trading it. While there is no capital gains tax in Singapore, it has an income tax rate of 17% which also applies to businesses or professions involving the trade of Bitcoin for profit. Therefore, crypto mining in Singapore is subject to taxation if the miners are actively using it as a source of income.