Outcry prompts waiver of VAT on cryptocurrency trading
THE REVENUE Department will waive value-added tax for people trading in cryptocurrencies on exchange markets approved by the Securities and Exchange Commission (SEC).
A law governing cryptocurrency transactions came into force on Monday, drawing criticism that it would prove an obstacle to technology startups that want to raise funds with the cheaper costs from initial coin offerings (ICO).
Saroch Thongpracum, the department’s director of legal affairs, said yesterday that it would issue a regulation waiving the 7 per cent VAT for individual investors to reduce their tax burden.
Cryptocurrency transactions are currently subject to income tax for both private companies and individual investors.
Individuals will still have to pay a 15 per cent capital gains tax, also known as a withholding tax, on income earned in a transaction, Saroch told a press conference.
He said the department would later revise tax regulations for private firms trading in cryptocurrencies.
In response to complaints that the tax policy was biased against the digital assets, Soroch said that the Revenue department considers cryptocurrency and digital tokens as intangible assets, so earnings derived from digital asset transactions will be subject to tax.
Under the new law, private companies launching ICOs have to pay corporate income tax on the funds they raise from the exercise. In contrast, private companies that issue initial public offerings of their shares are not subject to income tax.
The SEC is expected to issue regulations next month related to capital raisings via initial coin offerings. SEC secretary general Rapee Sucharitakul said a public hearing on the new rules and regulations will be held on Monday. The consultation would take about two weeks, before the SEC issues the detailed regulations in June.
The new regulation aims to provide protection for general investors since only investors who have knowledge of ICO issuance or digital-asset transactions should be allowed to engaging in this kind of trading, Rapee said.
The digital asset law authorises the SEC to regulate transactions involving cryptocurrencies and digital tokens.
Three groups of operators - ICO portals, brokers and traders - must obtain licences from the Finance Minister, said Kulaya Tantitemit, a Finance Ministry spokeswoman.
Investors have to trade or deposit their cryptrocurrencies with those who obtains the relevant licences from the SEC, she added.
