On Feb. 7, Reuters reported that Thailand’s finance ministry will exempt companies investing in initial coin offerings (ICOs) from corporate income tax and value-added tax.
According to a government spokesperson, apart from traditional methods, companies can also raise funds through other means such as token offerings. The military-backed Thai government has reportedly estimated that there will be approximately $3.7 billion worth of investment token offerings in the next two years.
However, it noted that providing these incentives would result in about $1 billion in lost tax revenue. Last year, the government scrapped plans to impose a 7 percent value-added tax on cryptocurrency transactions by exchanges and retail investors. Cryptocurrency trading and adoption is popular in Thailand, however, there are conflicting messages from the ruling elite.
Thailand’s Ministry of Tourism has been working hard to promote the place as crypto-friendly. However, the regime banned the use of crypto assets for payments last year, with its central bank arguing for a broader crackdown.
Thailand’s Securities and Exchange Commission is developing stricter rules for cryptocurrency trading and investing, in line with global action following the FTX crash in November. Whether companies issuing tokens eligible for these new tax breaks will have to register with the financial regulator and abide by its rules remains to be seen, but it is a strong possibility.
Bangkok, the Thai capital, is emerging as a new crypto hub, according to research last month by crypto tax software firm Recap. However, without the clarity of Singapore and Hong Kong, competition could be difficult. Tighter regulations in Thailand could hamper its ability to become a regional crypto hub, industry analysts said. “Thailand is also tightening regulations on cryptocurrency trading and advertising of digital assets. As stricter rules are rolled out, it will be interesting to see if this helps or hinders Bangkok’s status as a crypto hub in the coming months ,” Recap Chief Executive Daniel Howitt said last month. Bitkub, Thailand’s largest cryptocurrency exchange, currently sees around $29 million in daily trading volume, according to CoinGecko.
