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The future of digital asset taxes in Thailand
The 2022 Digital Global Overview Report, published by creative agency We Are Social and social media management platform Hootsuite, has revealed that 20.1% of the Thai population are crypto holders, while the global average rate is 10.2%. Despite high volatility in the crypto market, investing in cryptos is extremely attractive to Thai investors.
Another asset, the digital token, is starting to catch Thai entities’ interest, as they aim to expand their fundraising strategies beyond the common IPO of a company’s ordinary shares. Entities are offering digital tokens through the Initial Coin Offering (ICO) Portal approved by the Securities and Exchange Commission (SEC) of Thailand. Investors in digital tokens may receive benefits attached to the tokens as specified in the prospectus or white paper, e.g. income or profit-sharing under an investment token, or the right to use a product or service under a utility token.
When income, profits, or benefits arise from digital assets, taxation is inevitable. The Revenue Code of Thailand provides five types of taxes applicable to those dealing with digital assets:
WITHHOLDING TAX
Only profits derived from the trading of cryptocurrency and digital tokens (e.g. sale and exchange), and profits or remuneration derived from farming digital tokens are subject to withholding tax.- 15% if an investor is an individual;
- 15% if an investor is a foreign company or juristic person who does not conduct business in Thailand, but receives assessable income paid from or in Thailand.
PERSONAL INCOME TAX
Any person who earns an income from digital assets in the following ways will be deemed to receive “assessable income” and thus be subject to personal income tax:- Cryptocurrency or digital token trading. Profits derived from cryptocurrency or digital token sales or exchange are considered “assessable income”. The cost of crypto and digital tokens must be calculated by applying a method recognized in the accounting standards, such as first-in-first-out (FIFO) or moving average cost (MAC), which must be calculated separately for each digital asset. The chosen method must be applied consistently throughout the entire tax year.
- Cryptocurrency mining. Profits derived from cryptocurrency mining are considered “assessable income”. The process of mining cryptocurrency, that is creating new crypto by “solving mathematic puzzles”, will not be considered “assessable income” until the cryptocurrency is traded. The cost of cryptocurrency and digital tokens must be calculated by applying a method recognized in the accounting standards, such as FIFO or MAC, which must be calculated separately for each digital asset. The chosen method must be applied consistently throughout the entire tax year.
- Cryptocurrency earnings as salary or wages. The value of cryptocurrency income received as salary or wages can be treated as cost when it is sold, while the value at the time of acquisition or the average price on the date of acquisition is used to calculate revenue, which shall be a reliable reference price. The chosen method must be applied consistently throughout the entire tax year.
- Gift or airdrop of cryptocurrency or digital tokens. The value of cryptocurrency or digital token income received as a gift or airdrop can be treated as cost when cryptocurrency or digital tokens are sold, while the value at the time of acquisition or the average price on the date of acquisition is used to calculate revenue, which shall be a reliable reference price. The chosen method must be applied consistently throughout the entire tax year.
- Cryptocurrency or digital token farming (e.g. yield farming, or staking). The same concept as the previous two cases applies to determine benefits or remuneration derived from farming cryptocurrency or digital tokens.