Thailand will cancel the payment of VAT on cryptocurrency transactions

The Government of the Kingdom of Thailand will provide value added tax exemptions for transactions with digital assets until December 31, 2023.

Thai legislators made a proposal in March, but it was approved by the authorities only on May 24. According to royal decree, transactions with cryptocurrencies and tokens will be exempt from paying value added tax on trading floors registered by the Ministry of Finance. The main goal of the initiative is to facilitate the trading of cryptocurrencies on regulated exchanges so that authorized bodies, including the Securities and Exchange Commission of Thailand (SEC), can control and track transactions with cryptoassets.

Thai Finance Minister Arkom Termpittayapaisit is confident that tax breaks will encourage cryptocurrency exchanges to come out of the shadows and work legally. This will prepare the country’s payment infrastructure for the transition to the digital economy. The head of the Department of Revenue of Thailand, Ekniti Nititthanprapas, believes that the exemption of cryptocurrency transactions from VAT will make the purchase and sale of digital assets more convenient. The authorities intend to create an image of Thailand as a crypto-friendly jurisdiction in order to attract even more investors.

Transactions using the digital currency of the Central Bank of Thailand (CBDC) will also be exempt from VAT. In December, the central bank said it plans to start testing the digital Thai baht in 2022. The audit will involve local financial institutions and their clients. Since the beginning of the year, the government has introduced a 15% capital gains tax for private traders on all cryptocurrency transactions. However, the tax was later canceled due to numerous protests from market participants.

The SEC of Thailand is very wary of cryptocurrencies. In March, the agency warned against using digital currencies to make payments due to the threat of money laundering.