Thai ruling party MP Watanya Wongopasi has warned that crypto investors might shy away from injecting funds into the sector if the Excise department starts taxing trades. She said this in a Facebook post on January 20, urging the Excise department to conduct due diligence before imposing any taxes on crypto trading.
The Facebook post featured a summary of a virtual meeting by members of Thailand’s Committee on Monetary Affairs, Finance, Financial Institutions, and Financial Market. The meeting saw the committee members discuss various aspects of crypto taxation.
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During the meeting, Paiboon Nalinthrangkurn, the Chairman of the Federation of Thai Capital Market Organizations, pointed out that taxing stock and digital asset trades could reduce market liquidity by up to 40% because foreign and short-term investors would disappear due to high trading costs. He added that taxation would affect foreign traders more because trading costs would surge more than 160%.
iTax founder and CEO Yutthana Srisavat said it would be better to impose a corporate tax of value-added tax instead of taxing trading. According to him, such an approach would help the Thai crypto industry become more competitive internationally.
Additionally, Srisavat noted that the decentralized nature of cryptocurrencies makes it hard to obtain data and seller information. To this end, he believes it would be near impossible to collect tax information.
The Excise department has made little progress with taxing crypto
The Thai Excise department said it directs most of its resources to tax the stock market and has made little progress regarding crypto taxation. While the department still looks to find a way to regulate the crypto space, it noted that it is studying the industry to find the right approach. Moreover, the agency noted that it would only introduce taxation after careful consideration.
This news comes as the Thai government moves to tax the lucrative crypto industry. Before this, the government proposed a 15% tax on crypto gains. However, this proposal hit a brick wall, with several experts, including former Thai SEC executive Tipsuda Thavaramara, going against it.
Thavaramara said the three forms of crypto taxation that the Thai revenue department is developing are deeply flawed. According to the former SEC Chair, the capital gains taxes are impractical and unfair because crypto exchange operators are not liable to pay investment returns to customers.
She added that taxing capital gains would introduce complications in the retail payment sector because crypto payment services would have to charge their customers capital gains.
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