News and developments
The Thai Cabinet approves Tax Relief Measures on Digital Assets and Startups
The first set consists of tax relief measures for digital asset trading.
These tax relief measures target digital asset investors intending to further develop the digital asset industry and maintain the fairness of tax collection.
In particular, the tax relief measures provide that:
- for any transfer of cryptocurrency and digital tokens via digital asset exchanges approved by the Securities and Exchange Commission (“SEC”) and the Minister of Finance (“MOF”), VAT shall be exempted commencing from 1 April 2022 to 31 December 2023.
- for any transfer of cryptocurrency issued by the Bank of Thailand for public use in connection with the cryptocurrency development and testing program organized by the Bank of Thailand (“Retail Central Bank Digital Currency” or “Retail CBDC”), VAT is exempted commencing from 1 April 2022 (B.E. 2565) to 31 December 2023 (B.E. 2566).
- any losses occurred from the trading of cryptocurrency and digital tokens via digital asset exchanges approved by the SEC and the MOF can be offset against the profits incurred in the same tax year for the calculation of Personal Income Tax (“PIT”). This tax relief measure is retroactive and shall take effect as of 14 May 2018 (B.E. 2561), onwards.
- In case of individuals, juristic persons registered in Thailand or juristic persons registered abroad make a direct investment in startups operating in the targeted industries, the investors will be exempted from PIT or CIT on capital gains derived from the sale of shares, as the case may be.
- In case the investment in startups operating in the targeted industries is indirect, it shall be considered as taking place via Corporate Venture Capital (“CVC”) or Private Equity Trust (“PE Trust”), thus the following exemptions apply as the case may be:
- Thai and foreign CVCs and Foreign PE Trusts will be exempted from CIT on capital gains.
- Thai PE Trusts, are not subject to CIT.
- Thai and foreign investors who invest in CVCs will be exempted from PIT or CIT on capital gains derived from the sale of shares, as the case may be. Moreover, in case of dissolution of a Thai CVC they invested in, they will be exempted from PIT or CIT on benefits derived from the mentioned dissolution.
- Thai and foreign investors who invest in PE Trusts will be exempted from PIT or CIT on capital gains derived from the transfer of unit trusts. Moreover, in case of dissolution of a Thai PE Trust they invested in, they will be exempted from PIT and CIT on benefits derived from the mentioned dissolution.
- The startup receiving funds must realize at least 80% of the comprehensive income from the operations in the targeted industries in the two accounting periods preceding the sale of the shares.
- Investors must hold shares or unit trusts for at least 24 months before selling.
- Thai CVCs and PE Trusts must have a minimum capital of 20 million Thai Baht and must be registered with the SEC.