Thailand is reportedly set to further ease its tax policies for digital currency traders as it seeks to promote an industry that boomed last year in the Southeast Asian country. The country will scrap a 7% tax for traders on licensed exchanges, just a month after exempting them from a 15% capital gains tax.
Thailand’s cabinet approved the new, relaxed tax rules on March 8, paving the way for more aggressive growth in digital currency trading in the country.
Under the new tax regime, merchants can offset annual losses against tax gains due on their investments in digital assets. With the highly volatile market for digital assets, the new law will be a boon for traders who have had to pay taxes on gains without considering periods when prices are falling and their wallets are nearly wiped out.
More importantly, the 7% value added tax has been waived for traders using authorized exchanges, Finance Minister Arkhom Termpittayapaisith told a press conference.
The minister said the new tax regime will be in effect from April 2022 to December 2023. It will also extend to retail digital baht trading, the country’s next CBDC, although the timing of the digital currency’s launch is not clear. still be unclear.
The government is also looking to encourage investment in Thai startups with its new tax rules. The cabinet approved tax breaks for direct and indirect investments in startups, with investors who invest for at least two years in startups being offered tax relief for ten years until June 2032.
A month ago, the country’s tax authorities announced that they had dropped plans to introduce a 15% withholding tax on digital asset transactions. This was after traders staged strong opposition to the proposal, which they said would kill the booming industry.
As some of Thailand’s registered exchange executives revealed at the time, the country’s tax agency reached out to many stakeholders to discuss the planned taxation before deciding to remove it.
Thailand has become one of the largest digital asset markets in the world. According to the government, more than 2 million trading accounts are on registered exchanges, compared to less than 200,000 a year ago. With tourism impacted by the lockdowns caused by the COVID-19 pandemic, many have turned to digital assets to earn extra money.
But despite the trade implosion, the Thai market is dominated by the Bitkub exchange. Bitkub, which recently sold a 51% stake to Siam Commercial Bank for half a billion dollars, controls around 90% of the Thai market, according to some estimates.
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