Thailand issues tax exemption for investment tokens

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Thailand has announced tax exemptions for investment token holders as it seeks to boost local capital-raising efforts.

The country’s Cabinet approved a royal decree in its Revenue Code that will make holding investment tokens more lucrative. Under the decree, investors who generate income, profits, or any other benefits by holding investment tokens from local businesses can exclude such income when calculating their income tax as long as they have had their 15% withholding tax deducted. 

Kulaya Tantitemit, who heads the country’s Revenue Department, revealed that the exemption is only granted to investors who do not request refunds for the deducted tax. The new regime takes effect in 2025.

Thailand’s government believes the measure can promote fundraising through investment tokens as the digital economy proliferates. Tantitemit noted that investment tokens give businesses a new tool for attracting sophisticated investors.

“This measure is expected to increase Thailand’s competitiveness in capital mobilization. The move should positively affect investment and employment in the country,” Tantitemit told media outlets.

“The funds raised through such mobilization can contribute to the continued development of the Thai economy,” she added.

Investment tokens will attract 18.5 billion baht ($519 million) in additional capital for Thai businesses, the country’s Securities and Exchange Commission estimates.

The tax exemptions are the latest in concerted efforts by the Thai government to promote capital mobilization in the digital economy. Earlier this month, the Cabinet approved the tax-free issuance of investment tokens, waiving VAT and corporate tax income for issuers.

The Southeast Asian country projects that businesses issuing tokens will add $3.7 billion to the economy while the government will only lose around $1 million in taxes.

A month prior, the government had removed VAT on digital asset trading. Thai traders had to pay a 7% VAT on every transaction, fetching the government a sizable tax sum as Thailand ranks eighth globally for received digital assets. However, by scrapping the tax, the government believes the net effect will be a spike in trading, making Thailand the digital asset hub of Southeast Asia.

Thailand’s approach contrasts with most countries doubling down on taxing digital asset transactions and VASPs. Its neighbor Indonesia has adopted a similar approach, with the commodities watchdog pushing to lighten the tax burden for the digital asset industry.

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