Thailand, a country that has traditionally been considered crypto-friendly, is now planning to impose taxes on foreign income from crypto traders. The new government in power is facing the challenge of financing its economic stimulus measures, which include a proposed nationwide airdrop.
According to a report by the Bangkok Post on September 19, the Thai Revenue Department is specifically targeting overseas income, particularly that of cryptocurrency traders. The tax would apply to both Thai nationals and foreign individuals who reside in the country for over 180 days per year.
Under the new ruling, individuals who earn income from work or assets abroad will be subject to personal income tax. Legal experts have noted that the policy seems to have specific targets, including residents who engage in foreign stock market trading through foreign brokerages and cryptocurrency traders.
The finance ministry has stated that the tax principle is applicable to all income earned abroad, regardless of the source or the tax year in which the money is earned. This statement has sparked concerns among retired expats living in Thailand who receive pension income from abroad. However, it remains unclear whether they are included in the new ruling or how taxes on overseas crypto trading will be collected.
Thailand’s primary crypto platform, Bitkub, currently has a daily trading volume of $17.6 million. However, this is relatively small compared to Binance, the world’s largest exchange with over $4 billion in daily volume. Many traders in Thailand may also be utilizing overseas exchanges, as Bitkub offers only 95 coins compared to Binance’s 362.
Financial experts have warned that the new tax policy may alienate private bankers and financial institutions. This is noteworthy as Thailand previously backtracked on a proposed 15% crypto tax in February 2022 due to industry and public opposition.
The push for the new tax may be driven by the government’s aim to fund its economic stimulus measures. These measures are part of a larger plan by the newly appointed government to revive Thailand’s economy, which has experienced stagnation under military rule for the past decade. One of the proposed measures is a 10,000 THB (around $280) airdrop to eligible citizens using blockchain digital wallets. This initiative is estimated to cost around 2 trillion baht ($56 billion), which could explain the government’s search for new sources of revenue.
Additionally, the Thai government recently appointed a new Securities and Exchange Commission secretary-general, but her stance on cryptocurrencies remains uncertain. Meanwhile, Thailand’s benchmark SET Index has seen a decline of over 8% this year, making it one of the worst-performing markets in Asia. Foreign investors have pulled out approximately $4.3 billion from the Thai stock market, further contributing to the economic challenges faced by the country.
It remains to be seen whether the new tax ruling will attract more revenue or deter investment. If the trend of foreign investors pulling out continues, the tax policy could result in a decrease in money entering Thailand rather than an increase.
In conclusion, Thailand’s plan to tax foreign income from crypto traders marks a significant shift in the country’s previous reputation as crypto-friendly. The tax ruling targets both residents and foreigners and aims to generate revenue to fund the government’s economic stimulus measures, including a nationwide airdrop. However, concerns have been raised about the potential impact on private bankers, financial institutions, and foreign investors. The long-term effects of this tax policy on Thailand’s economy and crypto industry are yet to be seen.