A royal decree aimed at waiving capital gains tax for investment in startups is expected to come into force by the first quarter of this year, according to the Digital Council of Thailand (DCT).
The move is expected to lead to the creation of at least 5,000 local startups this year.
The DCT indicated it has been working with relevant state agencies, such as the Revenue Department, National Innovation Agency and Securities and Exchange Commission, to put forth this legislation.
DCT president Suphachai Chearavanont said the Revenue Department is in the process of proposing the draft legislation.
The progress of the proposed law was reported to the Center for Economic Situation Administration (CESA), chaired by the prime minister, on Jan 21.
The capital gains tax waiver for startup investors, which received approval from the prime minister late last year, is one of the government's measures to attract foreign investors, boost local startups' competence and level up the country's competitiveness.
According to Mr Suphachai, the DCT told the CESA that a roadshow should promote incentives for investors and targeted startups this year.
The government should also set up an assistance centre to facilitate startup investment, such as providing necessary information about incentives and coordinating with state agencies on relevant issues.
"The DCT is convinced the capital gains tax waiver and other promotion measures would be able to create 5,000 new startups in 2022, which would be vital in the country's economic recovery," said Mr Suphachai.
"This is a success and a stepping stone to attract both local and foreign investors and add more value to the country's economy," said Mr Suphachai.
According to Mr Suphachai, the DCT attaches importance to strengthening the country's tech ecosystem by developing digitally skilled people to be on par with international standards.
"We aim to develop people with high digital skills to reach 3.5 million by 2027," he said.
Standards and certificates for advanced digital skills will be ushered in, he said, adding that the DCT will support people to study high level digital skills training courses, as well as attracting foreigners with digital skills to the country to stimulate tech development and boost the advanced digital workforce supply, he said.
Sam Tanskul, managing director at Krungsri Finnovate, a corporate venture capital arm under Bank of Ayudhya, pointed out that Thailand is now one of just a few countries where capital gains tax for startup investment is applied.
Such a tax is waived in Singapore, the US and European countries as startups are regarded as high-risk businesses, he said.
A series of local startups are moving to other countries, such as Singapore, where incentives are provided for investors.
The tax waiver will potentially drive investment in local startups for strong growth, Mr Sam said.
In 2022, investment in local startups is expected to reach US$700 million, up from $500 million in 2021, excluding Siam Commercial Bank's investment in local cryptocurrency exchange Bitkub, he said.
Sarun Sutuntivorakoon, president of the Thai Venture Capital Association and N-Vest Venture partner, pointed out that the royal decree would create basic privileges necessary for promoting investment in startups and tech firms.
The move does not mean foreign investment will immediately shift to Thailand, but serves as a starting point for startups to grow and be able to compete with those in other countries, he said.
Nichapat Ark, director and adviser for Thailand coverage at Openspace Ventures, agreed that the move would attract foreign investment.
She said tax policy is one of the various factors investors consider for investment, in addition to market size and startups' business plans.
"This is a good collaboration between state and private agencies so as to attain the optimum benefits for the country."