A royal decree to remove capital gains tax for investments in startups is expected to come into force by the first quarter of this year, according to the Digital Council of Thailand (DCT).
This decision should lead to the creation of at least 5,000 local startups this year.
The DCT said it is working with relevant state agencies, such as the Department of Revenue, the National Innovation Agency and the Securities and Exchange Commission, to introduce this legislation.
DCT Chairman Suphachai Chearavanont said the Department of Revenue was in the process of proposing the bill.
The progress of the bill was reported to the Economic Situation Administration Center (CESA), chaired by the Prime Minister, on 21 January.
The capital gains tax exemption for start-up investors, which received the Prime Minister’s approval late last year, is one of the government’s measures to attract foreign investors, strengthen the skills of local startups and improve the country’s competitiveness.
According to Suphachai, the DCT told CESA that a roadshow is expected to promote incentives for investors and targeted startups this year.
The government should also set up a helpdesk to facilitate start-up investments, for example by providing necessary information on incentives and coordinating with state agencies on relevant issues.
“The DCT is confident that the capital gains tax exemption and other promotional measures could create 5,000 new startups in 2022, which would be vital for the country’s economic recovery,” said Mr Suphachai.
“It is a success and a springboard to attract local and foreign investors and add more value to the country’s economy,” Suphachai said.
According to Suphachai, the DCT attaches importance to strengthening the country’s tech ecosystem by developing digitally skilled people to meet international standards.
“We aim to develop people with high digital skills to reach 3.5 million by 2027,” he said.
Standards and certificates for advanced digital skills will be introduced, he said, adding that the DCT will help people take high-level digital skills training courses, as well as attract foreigners with skills. in the country to stimulate technological development and stimulate advanced development. digital labor supply, he said.
Sam Tanskul, managing director of Krungsri Finnovate, a venture capital subsidiary of Bank of Ayudhya, pointed out that Thailand is now one of the few countries where capital gains tax for investments of startup is applied.
Such a tax is removed in Singapore, the United States and European countries because startups are considered high-risk businesses, he said.
A series of local startups are moving to other countries, such as Singapore, where incentives are provided to investors.
The tax exemption will potentially spur investment in local startups for strong growth, Mr Sam said.
In 2022, investments in local startups are expected to reach $700 million, up from $500 million in 2021, not including Siam Commercial Bank’s investment in local cryptocurrency exchange Bitkub, he said. declared.
Sarun Sutuntivorakoon, chairman of the Thai Venture Capital Association and partner of N-Vest Venture, pointed out that the royal decree would create basic privileges needed to promote investments in startups and technology companies.
The move does not mean foreign investment will immediately shift to Thailand, but serves as a starting point for startups to grow and compete with those in other countries, he said.
Nichapat Ark, director and adviser for Thailand coverage at Openspace Ventures, agreed that the move would attract foreign investment.
She said tax policy is one of the various factors investors consider when investing, in addition to market size and startup business plans.
“It is a good collaboration between the state and private agencies to achieve the optimal benefits for the country.”