Thailand has announced a major tax incentive for companies that issue investment tokens, a new form of digital asset that represents a share of a project or business. According to a recent report, the Thai cabinet approved a proposal to waive corporate income tax and value-added tax (VAT) for companies that launch investment token offerings (ITOs) on March 7.
The deputy government spokesman Rachada Dhnadirek said that the tax exemption would help companies access alternative sources of funding besides traditional methods like issuing debentures or bonds.
Rachada added that the government expects the ITO market to grow rapidly in the next two years, generating up to 128 billion Thai baht ($3.7 billion) in capital. The state estimated that the tax waiver would result in a loss of 35 billion baht ($1 million) in tax revenues, but the benefits outweigh the costs.
The tax incentive is the latest step taken by Thailand to foster a friendly and clear regulatory environment for the crypto industry. The country has been one of the first in Southeast Asia to introduce comprehensive crypto laws, covering aspects such as licensing, taxation, custody, and consumer protection.
Changing stance over crypto?
In early 2022, Thailand proposed a 15% capital gains tax for crypto investors but later scrapped the plan and exempted crypto traders from the 7% VAT on authorized exchanges. The country also banned the use of cryptocurrencies for payments in March 2022, citing the risks of money laundering and fraud.
However, the Thai Securities and Exchange Commission (SEC) has also been working to tighten the crypto regulations to prevent scams and ensure investor safety. In January 2023, the SEC issued new rules for crypto custody services, requiring them to have a contingency plan in case of technical failures or cyberattacks.
The SEC also plans to introduce new qualifications for crypto investors, such as income and experience requirements, to limit the exposure of retail investors to high-risk assets. The regulator said that it would hold a public hearing on the proposed rules in March 2023.
