10% crypto levy mulled

Amend­ment on dig­i­tal trade heads to cab­i­net

Bangkok Post - - BUSINESS - WICHIT CHANTANUSORNSIRI NUNTAWUN POLKUAMDEE BLOOMBERG Ad­di­tional re­port­ing by Kom­san Torter­mvasana

A pos­si­ble 10% cap­i­tal gains tax on in­vest­ment gains in cryp­tocur­ren­cies will seek cab­i­net ap­proval to­day, says a source at the Fi­nance Min­istry.

The Rev­enue De­part­ment will pro­pose the cab­i­net amend the Rev­enue Code to pave the way for the tax-col­lect­ing agency to im­pose the 10% cap­i­tal gains tax from in­vest­ment gains in dig­i­tal cur­ren­cies, the source said.

The tax is part of a royal de­cree to com­pre­hen­sively reg­u­late cryp­tocur­ren­cies and ini­tial coin of­fer­ings (ICOs).

The div­i­dend tax on eq­uity in­vest­ment will be ap­plied to dig­i­tal to­kens, the source said.

Deputy Prime Min­is­ter Somkid Jatusripitak said last week the gov­ern­ment would try its best to is­sue the new law to reg­u­late ICOs and cryp­tocur­ren­cies this month.

Vir­tual coins will be clas­si­fied as dig­i­tal as­sets, not cur­rency, so the royal de­cree will em­power the Se­cu­ri­ties and Ex­change Com­mis­sion (SEC) to reg­u­late all as­pects of vir­tual coins.

There are three types of ICOs: as­set­backed, se­cu­ri­ties-backed and util­ity to­kens. Util­ity to­kens let in­vestors pur­chase a com­pany’s prod­ucts or ser­vices; as­set to­kens en­able in­vestors to ac­quire rights in as­sets such as bul­lion or prop­er­ties; and se­cu­ri­ties to­kens al­low in­vestors to ob­tain rights in rev­enue- or profit-shar­ing with­out en­gag­ing in day-to-day op­er­a­tions.

Rapee Suchar­i­takul, sec­re­tary-gen­eral of the SEC, said re­cently the reg­u­la­tions must set stan­dards for in­for­ma­tion dis­clo­sure and trans­ac­tion re­port­ing, while sys­tem se­cu­rity, trans­ac­tion ob­jec­tives and util­i­sa­tion of pro­ceeds aris­ing from ICOs would also come un­der the reg­u­la­tory frame­work.

The reg­u­la­tory frame­work will cover cryp­tocur­ren­cies in sev­eral ar­eas, in­clud­ing in­vestor pro­tec­tions and how cryp­tocur­ren­cies have some­times been used as a medium for money-laun­der­ing, tax avoid­ance and Ponzi schemes, he said.

Adisak Sukumvi­taya, chief ex­ec­u­tive at Jay Mart Plc, said he has not been in­formed about this with­hold­ing tax on cryp­tocur­rency in­vest­ment. It is up to the gov­ern­ment to de­fine what cryp­tocur­ren­cies are and whether they are clas­si­fied as se­cu­ri­ties or util­i­ties, said Mr Adisak.

“Per­son­ally, I think the reg­u­la­tor should an­nounce a clear pic­ture for the cryp­tocur­rency reg­u­la­tory [frame­work] at one time rather than grad­u­ally [un­veil] the frame­work in bits and pieces,” he said.

Ar­nat Leemakdej, pro­fes­sor at Tham­masat Busi­ness School, said this tax could be deemed as a cap­i­tal gains tax be­cause ICOs have no div­i­dend as profit made from cryp­tocur­rency trad­ing is not div­i­dend profit.

“Those who trade cryp­tocur­ren­cies could be taxed and such tax­a­tion has al­ready started in the US,” said Prof Ar­nat.

Traders could seek to en­gage in cryp­tocur­rency trad­ing over­seas, but they could be sub­ject to money laun­der­ing li­a­bil­ity once they repa­tri­ate such gains into Thai­land, he said. Prof­its earned from cryp­tocur­rency trad­ing is likely to be parked abroad by wealthy in­vestors, said Prof Ar­nat.

This tax could be con­sid­ered “shoot­ing two birds with one stone” by seek­ing a way to gen­er­ate rev­enue for the state and ob­struct the trend of cryp­tocur­rency spec­u­la­tion, he said.

In re­lated news, a royal de­cree on cryp­tocur­rency su­per­vi­sion will be for­warded for cab­i­net con­sid­er­a­tion to­day, with three main as­set cat­e­gories in the reg­u­la­tory frame­work, namely cryp­tocur­ren­cies, dig­i­tal to­kens, and as­sets in the elec­tronic for­mat, said the source.

The SEC and Bank of Thai­land will su­per­vise these dig­i­tal as­sets, said the source, with­out pro­vid­ing fur­ther de­tails.

A def­i­ni­tion of traders will also be des­ig­nated for clas­si­fi­ca­tion, said the source.

A source says the Rev­enue De­part­ment will pro­pose the cab­i­net im­pose a 10% with­hold­ing tax on div­i­dends from in­vest­ment in dig­i­tal cur­ren­cies.

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