After the Bank of Thailand ordered the country’s financial institutions to steer clear of cryptocurrency, its military government has now advised that cryptocurrency taxes are on the cards.
Thailand has previously been hesitant to take decisive action against cryptocurrencies. However, 2018 has seen this on-the-fence stance change.
February saw the country’s financial institutions put an end to offering crypto-related services, while earlier this month saw authorities suggest that virtual currencies would soon be subjected to tax regulations.
THAILAND TO ISSUE CRYPTO TAX
According to Nikkei Asian Review, the latter is definitely happening. Thailand’s Finance Minister, Apisak Tantivorawong, made the announcement on the 27th of March. Authorities cite the prevention of money laundering, tax evasion, and aiding in criminal activities as the reasons for the introduction of these cryptocurrency taxes.
Crypto investors will be liable to pay a 7% value added tax (VAT) on all of their cryptocurrency trades as well as a 15% capital gains tax on their returns.
PROTECTING THE STATUS QUO
The February ban and this latest tax development appear to show that the country’s government could be feeling wary of the impact that the disruptive nature of virtual currencies could have on their well-established processes.
Former finance minister and chairman of the Thai Fintech Association, Korn Chatikavanij, gave this warning:
But they have to be cautious not to allow their conservative instincts to result in draconian regulations.
CRYPTO POPULARITY WAS ON THE INCREASE
Thailand has a growing and enthusiastic cryptocurrency community. In the last few months of 2016, weekly Bitcoin transactions were sitting at 12 million baht, while last year saw that number quadruple to 48 million baht during the same time period. Some retailers in the country even accept Bitcoin as payment.
UNCERTAIN REGULATIONS A CAUSE FOR CONCERN
Startups also found success in Thailand last year. OmiseGo, a decentralized financial services platform, managed to raise $25 million during its ICO. However, the country’s delay in providing a clear regulatory framework has left startups registering their platforms, as well as their ICOs, in Singapore, which has long been seen as a crypto-friendly country.
Six.network, which is another decentralized financial services platform, is one such company. However, Natavudh Pungcharoenpong, a co-founder of the platform, has said that the startup is working with the Office of the Securities and Exchange Commission (SEC), a Thai regulator, stating:
The company has already approached the office to constantly clarify the operation to ensure transparency.
Another Thai startup, JFin, has also cited regulation indecision as the reason for the postponement of listing their tokens on digital exchanges.
The ban in February, the tax directive, and possible new regulations could push potentially lucrative Thai startups into the waiting arms of Singapore, Hong Kong, and even Switzerland.