Thais and Expats may be subject to large capital gains tax on their cryptocurrency trading

[webfact]

File photo for reference only

 

Taxing cryptocurrency profits must be at the top of most Revenue Departments across the World with the staggering profits made over the past couple of years.

 

Here in Thailand, the country’s Revenue Department is now discussing with digital asset exchanges on ways to collect withholding taxes on cryptocurrency profits.

 

Department spokesperson Sommai Siriudomset said the move is intended to make trading more convenient.

 

Cryptocurrency buyers currently have a duty to collect the 15% withholding tax from the profit gained by the sellers in every transaction.

 

Of course, with huge debts mounting due to the collapse of the hospitality industry and the ongoing cost of managing the pandemic, the Revenue department is keen to explore ways of gathering the tax.

 

Many people know that most tax agencies expect tax of some kind to be paid on cryptocurrencies -- and that  tax agencies are actively looking for those who are evading taxes.  

 

There are, however, a few countries where cryptocurrencies are not taxed under some or all circumstances, notably for those who buy, hold, and sell cryptocurrencies -- where it is completely legal and state-sanctioned not to pay taxes on cryptocurrency investment gains.

 

They include Germany, Portugal, Malta, and Switzerland in Europe and Singapore and Malaysia in Asia.

 

Inorganic law

 

Mrs. Sommai explained to the media that the Thai Revenue department is working to introduce an inorganic law to collect the 15% capital gains tax on the profits from cryptocurrency trading.

 

They have the authority to collect taxes from cryptocurrency trading because profits from such activity can be considered assessable income under Section 40 of the Royal Decree amending Revenue Code No.19.

 

She did however confirm that the department would calculate the tax from only profitable transactions, not losses.

 

This means sellers must record all profitable transactions to determine which require withholding tax.

 

The tax also covers Bitcoin mining transactions and the dividend or interest from cryptocurrency investment.

Apparently, Bitcoin mining is considered the same as ore mining, Mrs. Sommai said. 

 

Therefore, any gains from Bitcoin mining are considered income from commercial, agricultural, and industrial operations, which are subject to the tax under Section 40 (8).

 

However, Bitcoin miners may claim expenses incurred during the mining for a tax deduction.

 

Dividends or interest gained from investment in cryptocurrencies are considered to be income under Section 40 (4) and are subject to tax.

 

One trader, Sanjay Popli, who is the co-founder of Cryptomind, and owner of Merkle Capital, said that a large number of investors are still unsure about how the Revenue Department will calculate profits and losses from crypto trading.

 

He added that it is extremely hard to actually track gains from cryptocurrencies as most crypto traders are speculators. Many usually keep the coins for very short periods, before selling to take profits.

 

Many Thais and Expats across the country are sitting on huge gains from buying and selling bitcoins and will be watching what happens with interest.

 

Until the Thai government makes clear its regulations on taxation, traders will just have to wait and be prepared to allow for some form of payments to the Revenue departments.

 

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[RandiRona]

@Neeranam Any comments?? Seems they are learning fast atleast in this aspect.

[JoePai]

And any losses by the seller can be put against ones tax bill ?

[GrandPapillon]

if you are mining coins, do you need a work permit? ????

[ukrules]

This will kill the exchanges in Thailand.

 

Somehow I doubt that it will happen in this way but you never know.

Edited January 7, 2022 by ukrules

[HappyExpat57]

I am absolutely ignorant about bitcoin other than I understand it's internet trading. Couldn't such transactions be hidden behind a vpn, particularly if it's a coin that thumbs its nose at countries requesting transaction records?

[LoveThai94]

12 minutes ago, HappyExpat57 said:

I am absolutely ignorant about bitcoin other than I understand it's internet trading. Couldn't such transactions be hidden behind a vpn, particularly if it's a coin that thumbs its nose at countries requesting transaction records?

To trade you have to use an exchange, to be legal in say the US, all exchanges have to report the account holders information to the government.

 

Blockchain transactions are transparent and can be back traced, only way around this is stealing from another personal wallet.

[Whale]

19 minutes ago, HappyExpat57 said:

Couldn't such transactions be hidden behind a vpn, particularly if it's a coin that thumbs its nose at countries requesting transaction records?

You would not need a VPN, you would just need to use an international exchange instead of a Thai one and then either 1) be non Thai tax registered or 2) don't disclose.

 

The tax office are not a detective agency this will only apply to Thai exchange users (I have never used a Thai exchange so don't really know what they disclose or you disclose to them).

[khunjeff]

7 hours ago, webfact said:

Apparently, Bitcoin mining is considered the same as ore mining, Mrs. Sommai said. 

 

Therefore, any gains from Bitcoin mining are considered income from commercial, agricultural, and industrial operations, which are subject to the tax under Section 40 (8).

Ok, that seems like a strangely literal interpretation of the word "mining"...

[BostonRob2]

10 hours ago, RandiRona said:

@Neeranam Any comments?? Seems they are learning fast atleast in this aspect.

Neeranam has probably gone to ground a) because after giving it the big one about his success he'll soon have to start paying 15% tax to his govt and b) since his advice to all on the forum to invest just one Bitcoin has lost the best of 200,000 baht in a matter of days. 

[Edwin Cameron]

Bye,Bye Thailand, you ruin everything you touch through outright 'GREED'

[Whale]

A withholding tax is just too complicated it will turn all potential users off. Just say crypto profits are to be assessed as capital gains. 

 

Taxation is inevitable, when national stable coins are issued and become widely adopted they (tax office) will be able to see and track every satang/penny we spend/receive as we will all also have to have a digital ID as well. No hiding from the tax man in the future. Rumor is that China will test release their stable coin (digital money) by mid year.

[Freddy42OZ]

16 hours ago, HappyExpat57 said:

I am absolutely ignorant about bitcoin other than I understand it's internet trading. Couldn't such transactions be hidden behind a vpn, particularly if it's a coin that thumbs its nose at countries requesting transaction records?

No because they are talking about Thai crypto exchanges.  When I transfer cash from the exchange to my Thai Bank account the Thai exchange is *supposed* to withhold 15% for tax. 

The problem is they assume when someone takes money out it was a profit, but I've sold at a loss and withdrawn cash simply because I needed cash at the time.  

They are going to need to completely re-think this, although I doubt they will.

You can be in profit at 10am and have lost money by midday.  The market moves fast sometimes.

[userabcd]

27 minutes ago, Freddy42OZ said:

No because they are talking about Thai crypto exchanges.  When I transfer cash from the exchange to my Thai Bank account the Thai exchange is *supposed* to withhold 15% for tax. 

The problem is they assume when someone takes money out it was a profit, but I've sold at a loss and withdrawn cash simply because I needed cash at the time.  

They are going to need to completely re-think this, although I doubt they will.

You can be in profit at 10am and have lost money by midday.  The market moves fast sometimes.

Are you not supposed to keep track of all crypto sales and profit and loss transactions and keep records. Even trading crypto between each other is considered a transaction and if a profit is made capital gain are subject to tax.

 

One does not lose unless the transaction is traded out and if there is a loss then where would the 15 % be deducted from?

 

 

Edited January 8, 2022 by userabcd

[userabcd]

54 minutes ago, Whale said:

A withholding tax is just too complicated it will turn all potential users off. Just say crypto profits are to be assessed as capital gains. 

 

Taxation is inevitable, when national stable coins are issued and become widely adopted they (tax office) will be able to see and track every satang/penny we spend/receive as we will all also have to have a digital ID as well. No hiding from the tax man in the future. Rumor is that China will test release their stable coin (digital money) by mid year.

Records to keep. Its been in the news a long time.

 

Hopefully tax offices get banks and exchanges to start reporting crypto exchanges, there is a lot of money laundering going on behind the scenes with this stuff.

Edited January 8, 2022 by userabcd

[userabcd]

5 hours ago, Edwin Cameron said:

Bye,Bye Thailand, you ruin everything you touch through outright 'GREED'

Not greed, taxes on profits need to be paid,

[GrandPapillon]

you will have to be careful with capital gain tax, the definition of a capital gain might not be the same as the Thai authorities have in mind.

 

If you don't keep good records of every trade you make with real accounting principles, expect to pay much more than 15%, because losses will not accounted for in your net profit. This is a recurring problem in the US with stocks trading for small traders. Sometimes they end up paying 120% tax ????

[jethro69]

"They include Germany, Portugal, Malta, and Switzerland in Europe and Singapore and Malaysia in Asia."

 

The situation in Germany is only true if your holding your Cryptos for at least a year, otherwise if trading, they are subject to income tax, and the German income tax is the highest in the word. I assume that this one year moratorium will be changed very soon to either 5-10 years.

Don't know the exact situation on Switzerland right now, but will probably investigate. Right now you can still buy BTC for 900Euro/daily without KYC. So that might do the tax thing a bit difficult anyways.

In my own country, I just figured out that 6 months holding are tax exempt.

Most Thais I know, bought anyways at the peak of +2million, so there will little to none tax revenues for this year anyways.

Unless there are a few left, who are still fluid, and did the entry in the last 2 months, like myself, but then only with minimalistic figures anyways.

Just wonder how they will cash those taxes in, I assume they work then with those few Thai exchanges together.

[Heng]

Thank the old gods and the new for Singapore.