Tax planning of digital assets in Thailand

Due to the recent breakthrough of a digital assets price, the tax implications arising from digital assets trading have become a critical consideration among the traders in Thailand.  According to the current applicable regulations, the individual trader shall be subjected to both withholding tax – WHT of 15% from profit calculated on the capital gain basis upon completion of the transaction. The foregoing WHT is not a final tax that would be considered a tax credit.  The individual traders are obliged to file profit during 1 January – 31 December (the “Calendar Year“) in the personal income tax – PIT application on a capital gain basis according to the progressive rate up to 35%.  To avoid any doubt, any losses or expenses that occur during the same calendar year are not entitled to deduct or offset with the profit.  The scope of PIT shall be applied to any people who reside in Thailand for more than 183 days.

For example, Mr. A, a foreign nationality, has resided in Thailand for more than 183-days during the calendar year and has profited on the capital gain basis from digital asset trading around 10 Million Baht with the losses of 5 Million Baht and operating expense of 1 Million Baht.  He would be subjected to the withholding tax at the rate of 15%, equivalent to 1.5 Million Baht, and filing for PIT  with the effective rate of 35% equal to 3.67 Million Baht.  He would have a net profit after tax of only 0.33 Million Baht, equivalent to 3.28% of the total profit.

On the contrary, should Mr. A incorporate a limited company in Thailand with the business purpose for digital assets trading from its own money (the “Company“).  Subject to the regulations to the reduction of the tax rate for small and medium enterprises – SME, The Company’s profit shall not be subject to any withholding tax implication, only for the corporate income tax at the maximum rate of 20% per annum from the net profit after deduction of losses and expenses.  In our opinion, the Company’s acquisition or disposal of digital assets shall not be subjected to the value-added taxes according to the currently applicable regulations since the digital assets would be considered intangible assets according to the Thai Revenue Code – TRC.

For example, Mr. A has incorporated the Company for digital asset trading in Thailand instead of individuals.  The Company shall be subjected to the corporate income tax at the maximum rate of 20% with the reduction for SME, the total tax for the Company would be 605,000 Baht.  Mr. A would be subject to the withholding tax and PIT equivalent to 774,500 Baht.  After-tax, Mr. A would have a net profit of around 2.62 Million Baht, equaling 26.2% of the total profit.

CategoryProfitLossesExpensesCITPITWHTNet ProfitPercentage
Individual10.00   5.00         1.00        –  3.67   0.15         0.33         3.28%
Company10.00     5.00         1.00   0.610.77  0.65         2.62       26.21%
Unit per Million Baht
Comparison table between trading as individual and SME Company

There would be a standard gap from individual and corporate trading around 23%.  However, there is an alternative way to maximize tax benefits case-by-case basis.  Should you have any inquiries or requests for a preliminary consultation, please feel free to contact us via [email protected].

Worawit Thawinthikakul

Worawit Thawinthikakul