Thailand is set to impose taxes on the foreign earnings of crypto traders, implementing stricter measures to close a loophole that previously allowed overseas income to enter the country without taxation.
The new regulation has been introduced by Thailand’s Revenue Department, with the aim of funding the proposed economic stimulus, as reported by BangkokPost. To boost the national economy, Thailand recently introduced the “digital wallet” scheme, which is estimated to cost taxpayers around 560 billion baht.
Legal experts have identified three specific targets of these new tax rules. These include Thai residents engaged in trading on foreign stock markets using overseas brokerages, cryptocurrency traders, and both local and foreign nationals residing in Thailand for more than 180 days per year.
The policy also seeks to address “Thais who have been exploiting a loophole that allowed them to bring foreign earnings into the country tax-free after keeping them in an offshore account for more than a calendar year,” according to the report.
These tax rules are scheduled to take effect on January 1, 2024, enabling Thai authorities to tax foreign income starting from 2025.
Previously, Thailand only taxed foreign income residents when the funds were remitted into Thailand in the same year they were earned.
In response to the new regulation, an anonymous source from the Thai Finance Ministry stated,
“The principle of taxation is that you must pay tax on income earned abroad, regardless of how it was earned or the tax year in which the money was earned.”
Possible Impact on Foreign Investment
The report suggests that the introduction of crypto tax legislation could deter foreign investors, including private bankers, who may perceive Thailand’s regulatory environment as uncertain.
Additionally, the new policy may exacerbate income inequality in Thailand. According to a Rural Income Diagnostic by the World Bank, Thailand had the highest income inequality rate in the East Asia and Pacific region in 2019, with an income Gini index of 43.3%.
These guidelines, aimed at increasing revenue and curbing tax evasion, could potentially complicate business operations, impacting foreign direct investments.
