Tax on Cryptocurrency

In 2018, the law on cryptocurrency, which Thai people may familiar more as Bitcoin law that is actually one of the cryptocurrency,  has been enacted in Thailand in order to support investment in the digital age raising a lot of awareness among investors. However, the investment flows in cryptocurrency have been significantly sluggish due to market volatility.^[1] Until the past two years, the investment flow in cryptocurrency, both domestically and internationally, turns to be rose again. As can be seen from Paypal company, it allows its users to trade through Paypal platform by a designated Cryptocurrency. Especially, after Tesla announced the purchase of Bitcoin and planned to allow its customers to buy Tesla cars with Bitcoin; investors subsequently decide to invest in Cryptocurrency again both overseas and in Thailand since 2020 until present.

In order to regulate transaction involving Cryptocurrency, the Emergency Decree on Digital Asset Business B.E.2561 is enacted. When there is an investment, it will respectively generate profits, losses or income. Therefore, there must be a law enactment for taxation on investment in digital assets that the taxpayer receives, gains or increases in income from digital transaction which is the Emergency Decree Amendment of the Revenue Code (No. 19) B.E. 2561.  The types of assessable incomes under Section 40 (4) (h)  and (j)^[2] of the Revenue Code have been added, which the income from investment in digital assets is classified in the same category as income from interests or dividends. The payers must withhold income tax at the rate of 15 percent under Section 50 (2) (f) of the Revenue Code^[3] and if the payee is a natural person,  they have to include income from the share of profits or benefits from investing in cryptocurrency calculating with other types of assessable income. If the payee is a juristic person, by investing in cryptocurrency, if there are any profits or losses, it shall be incomes and expenses related to the business which must be included in the calculation of profits or losses to pay corporate income tax under Section 65, Section 65 bis and Section 65 ter of the Revenue Code. It could be seen that the loss from investment cannot be deducted as expenses in case of natural persons.  

Nonetheless, the Securities and Exchange Commission (SEC) passed a resolution to organize regulatory bodies for cryptocurrency transaction in 2020 and passed a resolution to revise regulations in April 2021 in order to set the qualification for new traders and business operators of cryptocurrency. Therefore, there is a possibility that the Revenue Department may enact any laws or regulations in order to facilitate the supervision and collection of taxes from cryptocurrency. Even though such  income has been prescribed that it will be collected in the form of profit margin, it may still have problems in calculating the costing, which the officials and taxpayers should have a common understanding of this issue in order to achieve the fairness in the future.  

^[1] https://www.stock2morrow.com/article-detail.php?id=1886  assessed on April 26, 2021.

^[2] Section 40 of the Revenue Code. Assessable income is income of the following categories including any amount of tax paid by the payer of income or by any other person on behalf of a taxpayer.

(h) share of profit or any other similar benefit obtained from holding or own a digital token

(j) benefits derived from the transfer of cryptocurrency or digital token, especially those valuation is more than invested.

^[3] Section 50 of the Revenue Code. A person, partnership, company, association or body of persons paying assessable income under Section 40 shall withhold income tax at every time of payment in accordance with the following methods:

(2) In the case of paying assessable income under Section 40 (3) and (4), withholding tax shall be made at the income tax rate; except

(f) In the case of assessable income under Section 40 (4) (h) and (i), the deduction shall be calculated at the rate of 15 percent of the income.