Following the cryptocurrency market's remarkable increase in size and value last year, Thailand's revenue department announced intentions to levy a 15% withholding tax on cryptocurrency transactions and tighten its cryptocurrency trading supervision earlier this month. According to the proposal, the withholding tax would only apply to individual investors and crypto miners, while exchanges will be excluded.
This proposed tax plan garnered a lot of reaction in the country's crypto sector. According to crypto industry leaders, extreme taxes might stifle the industry's potential development.
As a result of the reactions in the crypto industry, Thailand has decided to withdraw the proposed tax plan and has proposed new rules.
According to the manual published by Thailand's revenue department, the 15 percent withholding tax plan will be abandoned. Under the new rules, traders will be able to balance their yearly losses against profits achieved the same year under the new regulations. Earnings from cryptocurrency trading or mining may also be claimed as capital gains on tax returns.
The restrictions will apply to transactions made via Securities and Exchange Commission regulated company operators or exchanges. Transactions on such exchanges will also be exempt from a 15% withholding tax.
Over the past couple of years, especially during the coronavirus outbreak, Bitcoin and other digital asset trading grew significantly in Thailand, with average daily trading of $143.8 million. However, Thai authorities have been cautious in their approach to crypto regulation, and they are still contemplating using their authority to prohibit the use of crypto for payments.
Last week, Thailand's financial regulators also announced plans to restrict the use of digital assets as a payment method for products and services.
According to regulators, merchants would be prohibited from promoting or enabling digital assets as a form of payment, and exchangers and brokerage firms would be prevented from offering systems that allow merchants to accept crypto payments. Transfers of assets between accounts would be restricted as well. Additional regulatory guidelines will be provided for digital assets that are beneficial to the current financial system and those that present no structural concerns.