Crypto transfers granted tax exemption

Crypto transfers granted tax exemption

A representation of virtual currency Bitcoin and small toy figures are placed on computer motherboard in this illustration. (Reuters photo)
A representation of virtual currency Bitcoin and small toy figures are placed on computer motherboard in this illustration. (Reuters photo)

The Thai government is exempting value-added tax (VAT) from the transfer of cryptocurrencies or digital tokens until the end of 2023.

The exemption was announced as a new royal decree issued under the Revenue Code for the Exemption of VAT and becomes effective on Thursday.

Under the new royal decree, all transfers of cryptocurrencies and digital assets on licensed digital asset exchanges will be excluded from tax payments until Dec 31, 2023. The process and execution of the decree is the responsibility of the finance minister.

In March, the cabinet agreed to waive taxes for digital asset transactions. The recent decree extends that privilege to digital asset transfers.

Both exemptions last until the end of 2023.

Akaradet Diawpanich, chief executive of Cryptomind Group Holdings, said the waiver may be aimed at supporting the use of Central Bank Digital Currency in the future, but will have limited to no effect on digital asset investment.

He said investors would prefer an exemption from capital gains taxes on cryptocurrency trading because that levy is the main factor raising the cost of investing in digital assets.

Mr Akaradet said investments in all kinds of risky assets, such as stocks, bonds and cryptocurrencies, have stagnated as investors worry that inflationary pressures and the Federal Reserve's monetary policy tightening will slow global economic growth.

Interest rate hikes and quantitative tightening, or balance sheet reductions, are quickly draining liquidity from the global investment market, he said. Investments in the digital asset, stock, and bond market have all declined significantly, making investors cautious about investing in high-risk assets.

In addition, the cryptocurrency market is facing a major crisis triggered by the collapse of TerraUSD and Luna, which caused massive losses for investors. As TerraUSD had one of the largest market caps, its collapse sent ripples through the market and it will take some time to regain confidence in the system, said Mr Akaradet. He believes investment will pick up once the global economy recovers.

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