Thailand is embracing cryptocurrency as a fundraising tool by offering tax breaks to investors in a move aimed at stimulating the country's economy. In a recent cabinet decision, the government approved an exemption on income tax for profits earned from investment tokens. This eliminates the burden of double taxation, as capital gains tax of 15% was previously withheld on these earnings.
"The Ministry of Finance recognizes the potential of digital tokens as an investment avenue," said Kulaya Tantitemit, director-general of Thailand's Revenue Department. "This exemption will provide businesses with an alternative method to raise capital," she added.
This policy shift comes alongside a series of measures Thailand has undertaken to establish itself as a hub for digital assets. The government extended a value-added tax (VAT) exemption on cryptocurrency trading until the end of 2023, and offered tax incentives valued at $1 billion to firms issuing investment tokens. However, Thailand maintains a cautious approach towards cryptocurrencies as a form of payment, citing concerns about potential risks to financial stability.
The new tax exemption specifically targets investment tokens, which are digital assets representing ownership in a company or project. These tokens can entitle holders to dividends, voting rights, or access to exclusive products or services. By offering tax advantages for investment tokens, Thailand hopes to attract businesses seeking alternative fundraising methods beyond traditional channels like bank loans or stock issuance.
This move aligns with Thailand's broader strategy to position itself at the forefront of technological innovation. The government aims to leverage the potential of blockchain technology, the underlying infrastructure for cryptocurrencies, to drive economic growth in various sectors.
The impact of this policy on Thailand's financial landscape remains to be seen. While the tax exemption might incentivize investment in tokenized projects, it's crucial to establish clear regulations to ensure investor protection and prevent fraudulent activities. The success of this initiative will depend on striking a balance between fostering innovation and mitigating potential risks associated with the cryptocurrency market.