As a way of enforcing more oversight functions on the crypto market, Thai’s financial regulator has slammed its crypto traders with a 16% capital gains tax from their crypto profits. A local media report stated that the finance ministry would be highly watchful of tax filings henceforth, especially those involved in digital currencies. But the ministry didn’t disclose whether this tax levy will apply to potential profits.
New Tax Rules For Crypto-Traders
Highlights of the new policy show that crypto exchanges are exempted from this policy as only traders and miners will have to comply with this new directive. However, the local media remarked that this seems strange given that Thailand crypto exchanges work closely with financial institutions and top wealthy men in the country.
For instance, Siam commercial bank completed a 52% ownership of Bitkub two months ago. The bank is the oldest in Thailand, while the exchange is the biggest. Similarly, the wealthy family that owns the CP group (the leading food chain in Thailand) also owns the Upbit crypto exchange.
Also, one of the top lenders in the country, the bank of Ayudhya, loaned Zipmex Thailand (another leading exchange) with nearly $45m for the exchange to expand its scope of operations in august 2021. The new policy coupled with the growth in the trading volume is why Thailand’s revenue department has announced plans to monitor the digital asset this year closely.
Reactions To The New Policy
The CEOs of crypto exchanges are some of those who have reacted the quickest to the new policy. Zipmex boss, Aiklarp Yimwilai, opined that tax calculations become complex, especially when USD exchange rates are being considered.
He further said, “the revenue department or finance ministry needs to provide a simple and precise way to calculate these taxes. There are lots of citizens willing to pay their taxes, but they struggle to determine what constitutes tax from their profits.”
While the authorities haven’t mandated exchanges to deduct the taxes from the source, it also didn’t clarify whether the taxes should be filed along with the annual income filings. If the exchanges are granted the power to deduct taxes at the source, the growth of Thailand’s crypto sector may start dwindling at a fast rate.
Consequences Of This New Policy
Asides from stifling the growth of its crypto sector, a consequence of this new policy is that the tourism ministry’s plan of reviving the industry would no longer be feasible. A stricter oversight function over the crypto sector means that those big bags the tourism ministry have earmarked to help restore the sector would need to lie low, at least for the time being.
The country’s apex bank has instructed financial institutions and merchants not to accept digital currencies for payment settlements of transactions. Amidst the confusion, that’s apex bank still plans to request suggestions on properly monitoring the nation’s crypto sector. A guideline on the consultation is scheduled to be released before this month ends.