Draft law on the taxation of digital assets

On 13 March 2018, the Cabinet approved a draft law on the taxation of digital assets. The objective of the draft law is to cause taxpayers deriving income from digital assets, and digital asset business operators, to pay tax fully and correctly under the Revenue Code, as there is currently no definition of digital assets in the Revenue Code, nor has the Revenue Code yet defined what type of income that derived from digital assets is or the withholding tax implications for income derived from digital assets.

Keywords: Mazars, Thailand, Tax, Revenue Code, Digital assets, Cabinet

05 April 2018

The draft law therefore amends Section 39 of the Revenue Code to include the following definitions:

“Digital assets” means cryptocurrency, digital tokens, and assets in the form of other electronic data units specified by the Minister of Finance.

“Cryptocurrency” means an electronic data unit that may have a price or value agreed on or accepted between persons in exchange for the acquisition of goods, services, or other rights electronically without reference to any currency, foreign currency, or commodity.

“Digital token” means an electronic data unit which is created to determine the rights of an individual to participate in an investment in a project or business, or to acquire products, services, or other rights under an agreement specifically defined between the issuer and the holder.

In addition, the draft law adds 2 subcategories of assessable income under Section 40 (4) of the Revenue Code. These 2 sub-categories of assessable income are related to income generated from digital assets which are shares of profits or other benefits derived from digital assets, and benefits from the transfer of digital assets which exceed the cost of investment. The draft law also states that taxpayers are required to include such income in the calculation of their net income for personal income tax purpose, and sets the withholding personal income tax rate for these 2 subcategories of assessable income at 15%. The withholding corporate income tax rate will be determined when the draft law comes into effect.

However, the Council of State considers this matter, particularly the 15% tax rate, something that needs to be considered carefully before the draft law is made publicly available. Therefore, this matter will be reviewed in details again for accuracy. If amendments in essence are necessary, they must be proposed to the Cabinet to re-approve the law. Therefore, it is still unclear when the draft law will come into effect.