THE REVENUE Department plans to impose a 15 per cent withholding tax on profits and dividends generated by transactions involving digital assets.
The notice follows the Cabinet’s agreement in principle to regulate trades in cryptocurrencies, initial coin offerings (ICOs) and other activities related to digital assets.
The Cabinet yesterday approved in principle a draft emergency decree relating to businesses involved in trading digital assets and drafted an amendment to the Revenue Code for the collection of taxes on investments in the emerging sector.
Nattaporn Jatusripitak, an adviser in the Prime Minister’s Office, said the emergency decree was aimed at exerting control over those people who specifically invested in digital currencies as a means of closing loopholes for money laundering and fraud, not to ban all digital-currency investments.
The draft amendment of the Revenue Code aims to have tax collection from income or dividends from digital-currency investment ensure fairness in the tax system, he said. Currently, the Revenue Code has not yet determined the definition of digital assets and other taxation details related to them.
Deputy Prime Minister Wissanu Krea-ngam oversaw the legal drafts.
A source at the Ministry of Finance said that digital assets, under the draft emergency decree, would be classified into three types: cryptocurrencies, digital tokens, and other electronics-data assets.
A cryptocurrency is deemed to be a digital asset that may have a price or a value used, under agreement or acceptance among people, as a medium of exchange for products, services or other rights through an electronics process, regardless of reference to any currency, any foreign currency or any commodity.
“After this, the related agencies, including the Ministry of Finance, the Bank of Thailand, the Securities and Exchange Commission and the Anti-Money Laundering Office, will rush to discuss matters with the Council of the State as the Cabinet assigned it to accelerate the legal details and complete the task within one week,” the source said.
In regard to the direction for tax collection on profit and dividends from digital-currency investments, the Revenue Department has proposed the legal amendment of the Revenue Code for clearer taxation.
Usually, income from a digital-currency investment can be collected in the same way as other income, which is taxed with a ceiling rate of a 15 per cent withholding tax rate, the source said. The tax collection on digital-currency investments will be considered by the Council of the State.
Details of both legal drafts will be clearer next week, Nattaporn said. The draft emergency decree is now being considered in detail by the Council of the State and the organic laws associated with it would later be launched.
“The government is drafting the emergency decree for businesses involving digital assets and, now, it is under the consideration of the Council of the State,” Nattaporn said. “The aim is to protect people as, previously, there has not been a specific law (to govern digital currencies). Once we have the law, we have to talk about tax collection on how to tax income from digital-currency trade. Next week will see a clearer picture.”
Operators engaged in businesses affected by the draft emergency decree are required to be registered with the supervisory agency. These business operators include intermediaries, brokerages, providers of platforms, traders and dealers.
Tax collection on investment in digital currencies, in principle, will be subject to the assets involved. Profit from investment will be taxed. If some assets are similar to shares and are subject to dividend payment, tax will be levied on the dividends.