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Thailand scraps 15% digital currency withholding tax

Digital currency traders in Thailand will not have to pay the 15% withholding tax that the government is planning to impose effective this year. The country’s tax officials have axed the proposed tax regime and will instead focus on capital gains from the nascent industry.

Thailand’s digital currency industry has been thriving in the past two years as more people seek extra sources of income at a time when the Thai economy was greatly affected by the pandemic. The country heavily relies on tourism, accounting for about 20% of the GDP before international travel was shut down. 

With the rise in the number of digital currency traders, the Thai government spotted an opportunity to beef up its coffers. In January, reports from the country indicated that the Thai revenue department would impose a 15% withholding tax on digital currency traders. The department made it clear that traders and even miners have to start filing the tax this year. 

However, the taxman has decided to scrap the proposed tax. In a recently published manual, officials in the revenue department said that traders who make profits from trading digital currencies should report them as capital gains on their income taxes. In addition, the traders can offset their annual losses against their gains.

The digital currency industry, which was up in arms over the proposed taxes, has welcomed the move, which it says will spur innovation. According to Pete Peeradej Tanruangporn, the chairman of Thailand Digital Asset Operators Trade Association, the government also allied with stakeholders in the industry to assess the effect that the proposed tax would have before eventually scrapping it.

“The revenue department did a lot of homework and reached out to crypto operators as well to get feedback. It is much [friendlier] to both investors and the industry,” he commented.

Meanwhile, the Bank of Thailand could ban digital currency payments in the country in the coming weeks. In conjunction with the Securities and Exchange Commission and the Ministry of Finance, the bank issued a statement that criticized BTC payments, saying they pose a risk to the Thai financial system. The three welcomed feedback from the public before moving on with their proposal.

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