Emergency decrees on digital assets enacted by Thailand
The Thai Government published two Emergency Decrees in the Royal Gazette on 13 May 2018, to the law and regulations that were related to
- digital asset business operations; and
- (ii) Thai tax ramifications on certain income earned from digital assets.
As of 14 May 2018, the law has come into full effect. The law also governs to regulate business operations that are related to cryptocurrencies and digital assets and digital tokens which have been used recently in large numbers to raise public funds and also as a medium of exchange and other similar activities.
Any failure to comply to such rules will subject a digital asset business operator to fines or imprisonment. Furthermore, the income from these digital assets is also subjected to Thai tax in a similar manner that is applicable for any ordinary income.
The Alert summarizes the key features of the Law.
Definition of digital assets
Under the Law, digital assets include the following:
- Cryptocurrency: electronic data generated on a system or an electronic network to be used as a medium for exchange to obtain goods, services or any other rights, or to be exchanged for other digital assets, as well as other electronic data specified by the Securities and Exchange Commission of Thailand (the Thai SEC) Board.
- Digital token: electronic data generated on a system or an electronic network with the following objectives:
- To identify the rights of a person to invest in a project or business.
- To identify rights to obtain goods or services, or any other specific rights, as stipulated in an agreement made between the issuer and the holder, including other rights or units specified by the Thai SEC Board.
Digital asset activities and digital asset business operators
Digital asset business activities consist of:
(1) a digital asset trading center/exchange;
(2) digital asset brokerage;
(3) digital asset trading; and
(4) other activities related to digital assets as specified by the Minister of Finance.
Digital asset business operators who are engaged in digital asset business activities must obtain permission from the Minister of Finance.
Existing digital asset business operators who are required to obtain a license to operate the business must do so by 10 August 2018. However, they can continue to carry on their business while the license application is pending. If the application is rejected, they must cease its business operation.
Failure to comply with the provisions will result in imprisonment and/or a monetary penalty.
Thai tax implications
Shares of profits or any gains derived from holding digital tokens and an excess of the proceeds over an acquisition cost, arising from a transfer of cryptocurrencies or digital tokens are subject to Thai income tax in a manner similar to other ordinary income. Such income received by a foreign person would generally be subject to the 15% withholding tax.
The Law is effective as of 14 May 2018.