Thailand, a nation previously recognized for its crypto-friendly policies, is now embarking on a tax initiative aimed at collecting foreign income from cryptocurrency traders. The government’s motive behind this move is to generate revenue to finance its economic stimulus measures, including a planned nationwide airdrop. On September 19, the Bangkok Post revealed that the Thai Revenue Department has set its sights on overseas income, with a specific mention of cryptocurrency traders.
Under this new ruling, individuals who earn income from overseas sources, whether it be from work or assets, will be subject to personal income tax. The primary targets of this tax policy are Thai citizens and foreign nationals residing in Thailand for more than 180 days per year.
Legal experts have indicated that the policy’s specific targets include residents engaged in foreign stock market trading through foreign brokerages and cryptocurrency traders. The Thai government’s justification for this move is to ensure that everyone pays their fair share of taxes, as it seeks new sources of revenue to fund its economic stimulus measures.
It’s important to note that this isn’t the first time Thailand has imposed tax regulations on crypto traders. In January 2022, cryptocurrency trading profits were subjected to a 15% capital gains tax. However, in March 2022, the government exempted crypto traders from the mandatory 7% VAT on authorized exchanges and offered tax exemptions of up to 10 years for investors who invested in crypto startups within the country for at least two years.
In recent times, Thailand has been adopting stricter regulations regarding cryptocurrency. In April of the previous year, the country banned the use of cryptocurrencies as a means of payment, allowing them only as assets for investment. In January 2023, new crypto regulations were introduced for crypto custodians following the collapse of the Bahamas-based crypto exchange FTX in November 2022.
The Thai regulator also prohibited crypto exchanges from providing lending services in July and mandated a clear trading risks disclaimer for crypto trading customers. In August, Srettha Thavisin, a prominent business tycoon, was appointed as the Prime Minister of Thailand. During his election campaign, he promised a $300 airdrop to every Thai citizen aged 16 and above.
This tax policy comes at a crucial time for Thailand, as the government has launched various economic reforms, including the aforementioned nationwide airdrop, to stimulate the national economy. The digital currency handout policy is estimated to cost around 2 trillion baht ($56 billion). However, the country’s benchmark SET Index has experienced an 8% drop in the year, making it one of the worst-performing stock markets in Asia. Foreign investors have withdrawn approximately $4.3 billion from the Thai stock market.
While the Thai government’s goal with this tax policy is to increase revenue, it may have unintended consequences. It could deter foreign investors, particularly private bankers, who may view the regulatory environment in Thailand as uncertain. Additionally, the policy may exacerbate income inequality in Thailand, a country already struggling with high income inequality rates in the East Asia and Pacific region.