Draft decree on digital assets approved
The cabinet approved a draft of a royal decree Tuesday to regulate digital-asset-related transactions endorsed by the Council of State.
Finance Minister Apisak Tantivorawong said the Council of State has not modified the essence of the draft proposed by the Finance Ministry, which the cabinet approved in principle on March 13, but narrowed the definition of digital assets to cryptocurrencies and digital tokens, removing other assets such as electronic data, as specified by the ministry in the previous draft.
Mr Apisak said the next step is publication in the Royal Gazette before the decree can be enforced.
He said the new law to comprehensively regulate cryptocurrencies and digital tokens is necessary to prevent money laundering, tax avoidance and crime.
The new law is not meant to prohibit cryptocurrencies, initial coin offerings (ICOs) and other digital asset-related transactions, but to protect investors, said Mr Apisak.
He said the Finance Ministry and the Securities and Exchange Commission (SEC) are working on organic laws that require all digital asset transactions, including those of digital asset exchanges, brokers and dealers, to be registered with the relevant authorities.
Meanwhile, Deputy Finance Minister Wisut Srisuphan said the tax collection structure for investors who make digital-asset-related trades will remain unchanged, allowing the tax-collecting agency to impose levies on digital assets, as earlier approved by the cabinet.
Investors who make digital-asset-related trades will be liable for a 7% value-added tax (VAT) payment, on top of the 15% withholding tax on capital gains and returns from such investments, when the new law is enforced.
Retail investors will be exempt from paying the VAT if they trade digital assets through exchanges.
But investors will be required to pay VAT if their trades produce no capital gains, said Mr Wisut.
Finance Permanent Secretary Somchai Sujjapongse said the laws regulating digital assets, including cryptocurrencies, are a step in the right direction, adding several countries have greater awareness of the problems associated with them.
The government does not plan to promote cryptocurrencies, but rather wants to support blockchain technology since it is has many benefits, said Mr Somchai.
The planned tax imposed on investment in digital assets would be appropriate and impartial, he said.
But some have criticised the digital asset tax.
Korn Chatikavanij, chairman of the Thai Fintech Association, said the move would hinder the growth of domestic startups as they will register their businesses overseas to avoid the levy.
If ICOs cannot be developed in Thailand, then it is not a problem for ICO issuers because they can embark on ICO offerings in Singapore, even if the funding cost is higher there than in Thailand, he said.
"Singapore is a good location to raise funds from ICOs as it waives the capital gains tax, so the market environment supports the registration of ICOs with good prospects there," said Mr Korn.
"Who are the beneficiaries from Thailand's current rules and regulations on crypto-assets? I don't see [anyone benefiting] from the current situation."