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Digital Asset Taxes for Cryptocurrency and Digital Tokens

The Department of Revenue’s announcement regarding the taxation of cryptocurrency went into effect on May 13, 2018; however, investors continue to face confusion, controversy and other difficulties.

In January, the ministry held a public hearing with representatives from the public and private sectors. To explore digital asset tax guidelines, representatives from the Bank of Thailand, the Securities and Exchange Commission (SEC), the Thai Digital Asset Association, the Fiscal Policy Office, and investor groups came together to reach an approach to collecting tax on digital assets adapted to the current context. situation.

The guidelines are under the Revenue Code Amendment Act (No. 19) BE 2561 (2018). Taxable transactions must be made through the digital asset exchange platform under the SEC only. These are:

  1. The tax on taxable income (net profit/capital gain) can be calculated so that the loss corresponds to the offsetting of the losses by the gains during the same tax year. If any losses result from cryptocurrencies/digital tokens incurred in the same fiscal year, these may be offset against profits. However, only transactions involving digital assets regulated by the Stock Exchange Board of Thailand and the Stock Exchange of Thailand are permitted.
  2. Withholding at source: if the beneficiary cannot be identified and does not know the amount of income to be withheld, there is no obligation to withhold at source.
  3. Value Added Tax (VAT) is an exemption for transactions conducted through commercial operators or exchanges regulated by the SEC and on digital assets issued by the BOT.

The Ministry of Finance has categorized the cryptocurrency and digital token revenues that are expected to file a personal income tax return by submitting a Personal Income Tax Return (PND 90/91) by March 31, 2023 into five categories :

1.Exchange or transfer of cryptocurrencies or digital tokens

Income derived from trading, exchanging, selling, transferring or disposing of cryptocurrency/digital tokens is considered taxable income under Section 40(4)(g) of the Law amending the Tax Code (No. 19).

Revenues and profits from the sale, payment, transfer or trading of the cryptocurrency and digital token will be calculated as follows:

  • First in, first out (FIFO) The method assumes that the cryptocurrencies or digital tokens bought first are sold first.
  • The moving average cost is the cost calculation for each type of cryptocurrencies/or digital tokens is determined by the average cost of the same type of cryptocurrencies/or digital tokens at the beginning of the year as the cost of cryptocurrencies/or digital tokens purchased during the year. This is calculated each time you buy cryptocurrencies/or digital tokens.

Once a costing method is chosen, it must be followed throughout the tax year. And the cost should include necessary expenses such as transfer fees and other expenses.

2. Cryptocurrency mining

From the date of receipt of mining cryptocurrencies, they are not considered taxable income.

When mined cryptocurrencies are sold, paid for, transferred, or exchanged, they are considered taxable income under Section 40(8) of the Thai Tax Code less expenses incurred if necessary and reasonable. However, minors should keep relevant documents and prepare cost accounting such as computer maintenance costs, employee salaries, electricity bill and internet charges occurred during the tax year, including including expenses that are of the nature of investments in assets such as computers, which are gradually deducted from the depreciation of the asset in accordance with the law.

3.Get paid in cryptocurrencies as salary or salary

Employees receive a salary in cryptocurrencies as income, as employment is considered taxable income under Section 40(1).

Employees who have received remuneration in cryptocurrencies are considered income, whether from work or from the position that the employees are employed. Whether in full-time or part-time employment, he is considered to be the recipient of the taxable income under Article 40(2).

If employees receive salary which is taxable income under Section 40(1) and salary which is taxable income under Section 40(2) from the same employer, the recipient of the income must present it collectively under Article 40 (1) .

4. Receive cryptocurrencies as a gift, reward, prize

Receiving cryptocurrency/digital tokens by giving or receiving them as a gift is considered income under Article 40(8), for example, as a gift when attending an event or receipt of promotional rewards.

A digital cryptocurrency valuation can be made by calculating the cost and revenue using its value at the time of acquisition or its average price at the date of purchase.

Upon receipt of cryptocurrency/digital tokens and the value has been taxed, they may be used as a cost in the tax calculation upon sale.

5.Return on investment from holding a digital token or cryptocurrencies such as Yield Farming or Staking.

Under Section 40(4)(h), it is considered income: profit sharing or similar benefits derived from holding digital tokens.

Digital token cost and revenue metrics are based on the value at the time of acquisition or the average price at the date of purchase.

In the case of receiving digital tokens and whose value has been taxed, they can be used as a cost in the calculation of the tax during the sale.

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