Thailand would soon tax foreign earnings from crypto traders, a tighter measure to close the loophole, which allowed overseas income into the country tax-free.
The rule came from Thailand’s Revenue Department, which aims to fund its proposed economic stimulus, according to a BangkokPost report. To help stimulate the national economy, Thailand introduced the “digital wallet” scheme last month, which is estimated to cost the taxpayer about 560 billion baht.
The new tax rules have three specific targets, noted legal experts. This includes Thai residents trading in foreign stock markets using overseas brokerages, cryptocurrency traders and both local and foreign nationals residing in Thailand for over 180 days per year.
The policy also targets “Thais who have been exploiting a loophole that allowed them to bring foreign earnings into the country tax-free after keeping it in an offshore account for more than a calendar year,” the report read.
The new rule will come into effect from January 1, 2024, enabling Thai authorities to tax foreign income in 2025.
Previously, Thailand allowed foreign income residents to be taxed only when the funds were remitted into Thailand in the same year as it was earned.
Following the new rule, an anonymous source from the Thai Finance Ministry said,
“The principle of tax is that you must pay tax on income you earn from abroad no matter how you earn it and regardless of the tax year in which the money is earned.”
A Possible Impact on Foreign Investment
The report claimed that the crypto tax legislation would possibly turn away foreign investors like private bankers who might think that the regulatory environment in Thailand is uncertain.
Furthermore, the new policy might intensify income inequality in Thailand, it said. According to a Rural Income Diagnostic launched by the World Bank, Thailand has the highest income inequality rate in the East Asia and Pacific region with an income Gini index of 43.3% in 2019.
The guidelines, which aim to increase revenue by closing the barrier of tax evasion, would potentially complicate the performance of businesses, thus impacting foreign direct investments.