⚡Thailand delays crypto asset withholding tax!

Regulated Thai Crypto exchanges won’t need to deduct withholding tax

The Revenue Department of Thailand had earlier released new taxation guidelines relating to cryptocurrencies and digital tokens for Thai crypto exchanges which had meant to begin in 2022. This comes following a surge in digital currency trading and over two million account holders from just 170,000 a year earlier and volume traded of more than THB 1 trillion, however, with the weak economic environment, the recent changes to the tax and perhaps the likelihood of an early general election, the WHT has effectively been delayed for at least another year.

Crypto tax for 2022 hasn’t been scrapped only that your crypto exchange won’t be the one deducting it, but rather it is up to you to declare your net capital gain from digital assets along with your personal income for 2022. This change is to help faciliate the Revenue Department’s decision to allow you to deduct your crypto trading losses from your gains before submitting your net gain. It is also to discourage crypto traders from moving their accounts from a Thai regulated platform to unregulated one or an exchange abroad which doesn’t withhold tax.

Thailand considers digital assets as an asset and not a currency. The latest announcement also helps overcome another unresolved issue which is that the exchange would have been forced to withhold tax from the transfer of digital asset to a personal wallet even though the asset may not, in reality, have changed ownership (the asset being held anonymously with the exchange). This would potentially be contrary to Thailand’s capital gains tax legislation that determines the tax from an asset’s change in ownership.

Despite the positive changes for crypto traders, we recommend that crypto traders should consult about their crypto tax situation and the best process for you to follow which might legally reduce your Thai tax exposure – and MBMG can help you with this.

How do I know if I should pay tax?

• First – check where your platform and wallet – if in Thailand or a foreign country.
• Next – clarify what type of income you have realized on your digital asset – this should not include transferring to your Thai personal wallet from a Thai exchange.
• Pay tax if the income is realized in Thailand whether resident or non-resident. If the investors earn from selling their asset in another country, taxpayers will have to pay taxes only if they stay in Thailand for more than 180 days and bring the income to the country in the same tax year.

Two ways to calculate your annual crypto tax 

• First-in, first-out (FIFO) method assumes that cryptocurrencies or digital tokens purchased first are sold first. Hence, capital gains in each transaction are calculated based on the prices of the oldest cryptocurrencies in a portfolio.
• The Moving Average Cost is the arithmetic mean obtained by summing up the prices of all cryptocurrencies purchased in each accounting period, divided by the total number of cryptocurrencies owned.

Any loss arising from cryptocurrency and digital token trades can be offset against revenue accrued in the same accounting period.

However, this only applies to transactions made through the exchange platform listed under the supervision of the Security and Exchange Commission. A loss that occurs after its transferred to your Thai personal wallet and then sold on an offshore exchange cannot be counted.

Stick to the Same Method

The investors who trade the asset are allowed to have tax deductions. They could choose either “first-in, first-out” (FIFO), or “Moving Average Cost” for calculating the value. Whichever method is chosen, it must be persisted for the entire tax year.

Exchange or Transfer of digital assets

The income derived from trading (exchanging, selling, transferring, or disposing of cryptocurrency) is regarded as assessable income under Section 40 (4)

If two investors exchange their digital assets, they would be valued in fiat money, which will be the baht, and if their investment cost is lower than their selling price, then they have to pay tax on the difference.

Crypto as salary, wages, fee, commission

Those who receive crypto for their employment, such as salary, wage or payment for their work performance like fee and commission, are treated as assessable income subject to personal income tax, according to the Revenue Code’s Section 40(1) and 40(2

Cryptocurrency tax conclusion

*Investors shall include income earning from cryptocurrency with other incomes e.g. salary, income from business deduct with expenses and other deductions and allowances for annual personal income tax filing and pay by the progressive income rates 5-35%.

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