Thailand to Offer Tax Breaks for Firms that Issue Security Tokens

Thailand’s cabinet announced on Tuesday it has agreed to offer tax breaks for digital token issuers in the country, Reuters reported. The move, a year after the government relaxed tax rules for digital asset investments, is expected to cost Thailand around $1 billion in tax revenue.

Thailand Expects $3.7B in Security Token Offerings in the Next Two Years

Thailand’s government said it would waive corporate income tax and value-added tax for companies that issue digital tokens. Along with traditional methods like debentures, companies can take advantage of alternative sources of raising capital in the country.

According to government estimates, Thailand can be home to $3.71B worth of security token offerings over the next two years, spokeswoman Rachada Dhnadirek said. She added that the Thailand government is expected to lose tax revenue of around 35 billion baht.

The latest decision comes exactly a year after Thailand’s cabinet eased its crypto tax rules to facilitate the growth of the digital asset sector in the country. At the time, the authorities allowed traders to offset annual losses against tax gains due on crypto investments and waive a value-added tax of 7% for digital asset trading on licensed exchanges.

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Thailand Joins Japan in Offering Tax Breaks

Digital assets have become increasingly popular in the Asian country since its securities regulator began regulating the sector. However, Thailand’s central bank and other regulators have prohibited crypto payments, citing potential risks to financial stability and the overall economy. Meanwhile, Thailand’s central bank has been involved in other projects related to digital assets, including plans to launch a central bank digital currency (CBDC) payment system.

Last year, Japan’s financial regulator also proposed tax breaks for crypto and individual stock investors to spur broader economic growth. The proposal aligned with Prime Minister Fumio Kishida’s “New Capitalism” growth plan aimed at expanding the country’s economy.

In December, Japan’s ruling party passed the proposal, renouncing the previous 30% tax on crypto service providers holding unrealized gains from their digital assets. The public has heavily criticized Japan’s heavy tax burden for digital assets issuers for hindering innovation and the sector’s growth.

India remains one of the countries with the highest tax on crypto profits, which resulted in $3.8 billion in outflows from local crypto exchanges in 2022.

Editorial Update (7th March 2023, 7:54AM EST): The article has been expanded to offer more context and information on the story.

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