On Feb. 7, Reuters reported that Thailand’s Ministry of Finance will exempt companies conducting initial coin offerings (ICOs) for investment from corporate income tax and value-added tax.
According to government spokespersons, companies will have access to alternative methods of raising capital through token issuance in addition to traditional methods.
The military-backed Thai government estimated that there will be around $3.7 billion in investment token offerings over the next two years, according to the report.
However, he noted that there would be a tax loss of around $1 billion from offering these incentives. Last year, the government scrapped plans to charge 7% VAT on cryptocurrency trading for exchanges and retail investors.
Conflicting crypto messages in Thailand
Cryptocurrency trading and adoption is popular in Thailand, however there have been mixed messages from the ruling elite.
Thailand’s Ministry of Tourism has been trying to promote the place as crypto-friendly. However, the regime banned the use of crypto assets for payments last year, and its central bank advocated a broader crackdown.
The Thai SEC is preparing stricter rules for trading and investing in cryptocurrencies in line with measures taken around the world following the FTX collapse in November.
Whether companies issuing tokens eligible for these new tax breaks would need to register with the financial regulator and comply with its rules remains to be seen, but it is highly likely.
According to research by crypto tax software company Recap last month, Thailand’s capital Bangkok is emerging as a new crypto hub. However, without the clarity that Singapore and Hong Kong have, it can be difficult to compete.
Industry analysts have suggested that a tightening of regulations in Thailand may hamper its ability to become a regional crypto hub.
“Thailand is also tightening its rules on cryptocurrency trading and digital asset advertising. With stricter rules, it will be interesting to see if this helps or hinders Bangkok’s place as a crypto hub in the coming months,” Recap CEO Daniel Howitt said last month.
Thailand’s largest cryptocurrency exchange Bitkub has about $29 million in current daily volume, according to CoinGecko.
Markets go back again
Crypto markets are pulling back once again, with total capitalization declining 1% on the day to $1.06 trillion as of this writing.
BTC had lost 1.4%, breaking out of its four-day channel to trade at $22,000. Meanwhile, Ethereum was holding steady at $1,564, having lost just half a percent on the day.
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