Crypto tax collection changes considered

Crypto tax collection changes considered

Representations of cryptocurrencies are placed on US banknotes in this illustration taken Nov 28, 2021. (Reuters photo)
Representations of cryptocurrencies are placed on US banknotes in this illustration taken Nov 28, 2021. (Reuters photo)

The Revenue Department is in talks with digital asset exchanges to enable the latter to collect withholding taxes on cryptocurrency profits, says department spokeswoman Sommai Siriudomset.

The move is intended to make trading more convenient.

Cryptocurrency buyers currently have a duty to collect the 15% withholding tax from the profit gained by the sellers in every transaction.

Mrs Sommai said the department is working to introduce an inorganic law to collect the 15% capital gains tax on the profits from cryptocurrency trading.

The department has the authority to collect taxes from cryptocurrency trading because profits from such activity can be considered assessable income under Section 40 of the Royal Decree amending Revenue Code No.19.

She said the department would calculate the tax from only profitable transactions, not losses.

This means sellers have to record all profitable transactions to determine which require withholding tax.

Mrs Sommai said the tax also covers Bitcoin mining transactions and the dividend or interest from cryptocurrency investment.

Bitcoin mining is considered the same as ore mining, she said. Therefore the gains from Bitcoin mining are considered income from commercial, agricultural and industrial operations, which are subject to the tax under Section 40 (8).

Bitcoin miners can claim expenses incurred during the mining for a tax deduction, Mrs Sommai said.

Dividends or interest gained from investment in cryptocurrencies are considered to be income under Section 40 (4) and are subject to tax.

She said the department deployed a data analytics system to examine tax payments from cryptocurrency trading.

If the department finds any irregularity in terms of tax payment, it has the authority to summon the related parties, including financial institutions or trading platforms, to provide information.

Sanjay Popli, co-founder of Cryptomind, owner of Merkle Capital, said many investors are still in the dark about how the Revenue Department will calculate profits and losses from crypto trading.

He said it is very difficult to track gains from cryptocurrencies as most crypto traders are speculators who usually hold the coins for a very short period before selling to take profits.

One question that remains is whether losses from crypto trading can be deducted from profits, said Mr Sanjay.

It is also unclear if gains from arbitrage trading, in which investors simultaneously buy and sell the same coin listed on different exchanges to take profits from the price variations in each exchange, will be considered profits, he said.

Akalarp Yimwilai, chief executive of Zipmex Thailand, a digital asset exchange, said tax collection can happen, but the department should provide clarity regarding the criteria for the profit calculation so taxpayers can ensure they are legally taxed.



Do you like the content of this article?
COMMENT (1)

Bitcoin has no future as a payments network - FTX

Cryptocurrency exchange FTX's founder has said that bitcoin has no future as a payments network and criticised the digital currency for its inefficiency and high environmental costs.

12:40

US in mourning, outrage after 'racist' mass shooting

Grieving Buffalo residents held vigils Sunday after a white gunman who officials have branded "pure evil" shot dead 10 people at a grocery store in a "racist" rampage.

11:02

N Korea reports more deaths amid Covid lockdown

North Korea said on Sunday a total of 42 people had died as the country began its fourth day under a nationwide lockdown aimed at stopping the impoverished country's first confirmed Covid-19 outbreak. - REUTERS

10:56