Currencies

Thailand scraps VAT for digital currency transfers until 2024

A new decree promoting digital currency investment in Thailand has just come into force. Authorities in the Southeast Asian country have formally introduced a seven percent value-added tax (VAT) exemption for transfers of digital currencies made on government-registered exchanges until 2024.

According to a decree published in the Royal Gazette, the new law will apply retroactively from April 1 and last until December 31, 2023. The measure was first approved in March but has become part of Thai law following the Royal decree.

The Thai government stated that the primary purpose of implementing the tax relief is to encourage digital currency trading through duly approved channels. This will allow the relevant authorities like the Securities and Exchange Commission (SEC) to monitor the market adequately.

Thai Minister of Finance Arkom Termpittayapaisit said that the move would bring about a more robust payments system. He stated in the document that the decree:

“Would encourage Thailand to have an infrastructure and payment system that would be ready for the future digital economy.”

The Director-General of the Revenue Department, Ekniti Nititthanprapas, also added that the decree would help Thailand become a digital currency tax haven. Notably, the exemption will also apply to payments made with the CBDC Thailand plans to launch later this year.

Digital currencies still not allowed as a method of payment

Despite easing tax requirements for digital currencies, Thailand has still not fully embraced the asset. The government has made it clear that it only considers digital currencies to be only an investment vehicle and not a method of payment.

The governor of the Bank of Thailand, Sethaput Suthiwartnarueput, reiterated this while speaking at the World Economic Forum Annual Meeting 2022 as reported by Fortune.

“It’s fine if you want to invest in [crypto], but we don’t want to see it as a means of payment because it’s not appropriate,” he said in Davos.

Recall that the Thai SEC placed a ban on using digital currencies for payments earlier this year. The government cited concerns that widespread digital currency payments could threaten the Thai economy.

Data from the Thai SEC shows that digital currency investments have been shooting up significantly recently. Around 2 million Thai investors now hold around $3.4 billion worth of digital currencies.

To curb the risks the securities regulator foresees from this growth, the Bank of Thailand has stated that it will introduce regulations to limit the exposure of commercial banks to digital currencies.

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