A new decree promoting investment in digital currency in Thailand has just come into force. Authorities in the Southeast Asian country have officially introduced a 7% value-added tax (VAT) exemption for digital currency transfers 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 will last until December 31, 2023. The measure was first approved in March but became part of Thai law in following the royal decree.
The Thai government has stated that the main purpose of implementing the tax relief is to encourage digital currency trading through duly approved channels. This will allow competent authorities such as the Securities and Exchange Commission (SEC) to monitor the market adequately.
Thai Finance Minister Arkom Termpittayapaisit said the move would bring a more robust payment system. He said in the document that the executive order:
“Would encourage Thailand to have an infrastructure and payment system that would be ready for the future digital economy.”
Director General of 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 CBDC Thailand plans to launch later this year.
Digital currencies are still not allowed as a method of payment
Despite easing tax requirements for digital currencies, Thailand has still not fully embraced this asset. The government has made it clear that it only views digital currencies as an investment vehicle and not a method of payment.
Bank of Thailand Governor Sethaput Suthiwartnarueput reiterated this during his speech at the 2022 World Economic Forum Annual Meeting, as reported by Fortune.
“It’s good 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 banned the use of digital currencies for payments earlier this year. The government has raised concerns that large-scale digital currency payments could threaten the Thai economy.
Data from the Thai SEC shows that digital currency investments have increased significantly recently. Around 2 million Thai investors now hold around $3.4 billion worth of digital currencies.
To limit the risks the securities regulator foresees from this growth, the Bank of Thailand said it would introduce regulations to limit commercial banks’ exposure to digital currencies.
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