Executive summary

On 13 May 2018, the Thai Government published two Emergency Decrees in the Royal Gazette to enact the law (the Law) and regulations related to: (i) digital asset business operations;¹ and (ii) Thai tax ramifications on certain income earned from digital assets.² The Law is effective as of 14 May 2018 and aims to govern and regulate business operations related to digital assets as cryptocurrencies and digital tokens have increasingly been used as tools to publicly raise funds, as a medium of exchange, and similar activities.

Failure to comply with the rules will subject a digital asset business operator to imprisonment and/or fines.

Further, income from digital assets is subject to Thai tax in a manner similar to other ordinary income.

This Alert summarizes the key features of the Law.

Detailed discussion

Definition of digital assets

Under the Law, digital assets include the following:

• Cryptocurrency: electronic data generated on a system or an electronic network to be used as a medium for exchange to obtain goods, services or any other rights, or to be exchanged for other digital assets, as well as other electronic data specified by the Securities and Exchange Commission of Thailand (the Thai SEC) Board.
• Digital token: electronic data generated on a system or an electronic network with the following objectives:
  • To identify the rights of a person to invest in a project or business.
  • To identify rights to obtain goods or services, or any other specific rights, as stipulated in an agreement made between the issuer and the holder, including other rights or units specified by the Thai SEC Board.

Digital asset activities and digital asset business operators

Digital asset business activities consist of: (1) a digital asset trading center/exchange; (2) digital asset brokerage; (3) digital asset trading; and (4) other activities related to digital assets as specified by the Minister of Finance.

Digital asset business operators who are engaged in digital asset business activities must obtain permission from the Minister of Finance.

Interim arrangement

Existing digital asset business operators who are required to obtain a license to operate the business must do so by 10 August 2018. However, they can continue to carry on their business while the license application is pending. If the application is rejected, they must cease its business operation.

Penalty

Failure to comply with the provisions will result in imprisonment and/or a monetary penalty.

Thai tax implications

Shares of profits or any gains derived from holding digital tokens and an excess of the proceeds over an acquisition cost, arising from a transfer of cryptocurrencies or digital tokens are subject to Thai income tax in a manner similar to other ordinary income. Such income received by a foreign person would generally be subject to the 15% withholding tax.

Effective date

The Law is effective as of 14 May 2018.

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ENDNOTES

¹ Digital Asset Business Opearation B.E. 2561, governing the legislation related to digital asset business operation.

² Amendment of the Revenue Code (No. 19), governing Thai tax implications on income from digital assets.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

EY Corporate Services Limited, Bangkok

• Yupa Wichitkraisorn
  yupa.wichitkraisorn@th.ey.com
• Kasem Kiatsayrikul
  kasem.kiatsayrikul@th.ey.com
• Kamolrat Nuchitprasitchai
  kamolrat.nuchitprasitchai@th.ey.com

Ernst & Young LLP, Thai Tax Desk, New York

• Sarunya Sutiklang-viharn
  sarunya.sutiklang-viharn1@ey.com

Ernst & Young LLP, Asia Pacific Business Group, New York

• Chris Finnerty
  chris.finnerty1@ey.com
• Kaz Parsch
  kazuyo.parsch@ey.com
• Bee-Khun Yap
  bee-khun.yap@ey.com

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ATTACHMENT

PDF version of this Tax Alert