Guidelines on filing tax returns for digital asset investors

The guidelines were revealed as frequently asked questions, covering income types, capital calculation, and cryptocurrencies/tokens valuation.

Q: What is the origin of cryptocurrency taxes and why must the Revenue Department collect this tax?

A: Earlier, income from selling cryptocurrency was included in income under Section 40 (8) of the Revenue Code. However, a change in the Revenue Code at the end of 2018 changed the income type from under Section 40 (8) to Section 40 (4), as income from cryptocurrency is a consequence of investments.

The department decided to publicise this for taxpayers to avoid being slapped with penalties.

Q: How does the Revenue Department categorise each digital asset?

A: The department uses the Digital Asset Investment Guide compiled by the Securities and Exchange Commission. (https://www.sec.or.th/TH/Documents/DigitalAsset/DigitalAssetInvestment-Guide.pdf)
 

Q: Who must file income tax for cryptocurrency trading?

A: All taxpayers with income from such transactions must file their returns.

Q: How many types of income accrue from cryptocurrencies?

A: There are three types of income:

• From selling cryptocurrencies secured from mining. It will be income under Section 40 (8). Taxpayers can deduct the capital from the income.
• Profit from selling or transferring cryptocurrencies. It will be income under Section 40 (4), which will be calculated on only the profit (selling price minus cost);
• Payoff from utilising cryptocurrencies also will be deemed income under Section 40 (8).

Q: How does one calculate the capital of cryptocurrencies?

A: It could be calculated by the moving average cost, first-in, first-out, or other methods. Whatever method a taxpayer chooses, they will have to use this method to calculate the capital for the entire tax year.

Q: If taxpayers want to change the calculating method of cryptocurrencies/digital tokens, do they have to be approved by the department’s director-general or the person that he/she assigns?

A: They do not have to be approved if they want to change the method in the next tax year.

Q: Do cryptocurrencies or digital tokens have to be exchanged to baht before calculating taxes?

A: For personal income tax, the tax will be collected only when taxpayers earn more than what they have invested. If they only possess them without transferring, they will not be considered as having an income.

Where cryptocurrencies have been exchanged to baht, the tax will be collected only when earnings are more than the invested amount.

For example, if a person bought one coin of a cryptocurrency for 100 baht and the person exchanged it for 150 baht, it means they earned 50 baht income.

Q: Do taxpayers have to pay taxes for exchanging cryptocurrencies from one currency to another?

A: If they earn an income from their investment, it will be considered as income under Section 40 (4). They will also have to pay taxes from cashing in and out with the baht.

Q: How can investors who buy/sell cryptocurrencies or digital tokens in foreign countries file their taxes?

A: First, they have to check where their wallet (Thailand or foreign countries) is used for exchanging.

Second, they will have to pay taxes if it is income in the country. However, if they earn from other countries, taxpayers will have to pay taxes only if they stay in Thailand for more than 180 days and bring the income to the country in the same tax year.

Q: How do taxpayers calculate taxes if they exchange cryptocurrencies/digital tokens with other currencies?

A: They can use one of the following methods to calculate the exchange rate to baht

1. The daily exchange rate according to commercial banks (buying and selling rate)
2. The daily exchange rate according to the Bank of Thailand (the average buying and selling rate according to Section 9)

Q: How does one calculate income from investing in cryptocurrencies/digital tokens?

A: The income will be calculated from the profit earned from buying and selling, from which they could deduct their losses.

Q: Will a taxpayer be considered as having income if they sell their cryptocurrencies/digital tokens but do not withdraw from their accounts?

A: Yes, they will be considered as having an income even if they do not withdraw, and they have to file PND90.

Q: Could the cost from mining (electricity, deposit, maintenance) be deducted from the profit?

A: Income from mining is under Section 40 (8). The cost could be deducted as long as it is necessary and appropriate.

Q: If income from mining is under Section 40 (8), does it mean that taxpayers have to file tax returns two times and separate the account book from mining and exchanging? How to decide which is their income type if they use the same wallet?

A: Taxpayers have to maintain a separate account for their costs according to sources. They could choose the sources of their income (selling or mining).

Q: Who is responsible for withholding tax?

A: If taxpayers (individuals) sell or exchange cryptocurrency with buyers, they will have to pay taxes at 15 per cent of their income.

Taxpayers could submit withholding tax certificates if they have already paid.

Q: How do people engaged in trading in digital assets file their tax returns?

A: For mining and pay-offs

Mid-year tax: Taxpayers have to calculate the tax by deducting the income from the capital.

Annual tax: Taxpayers have to calculate the tax by deducting the income from the capital.

Taxpayers could use the document of mid-year tax as the credit for the annual tax.

Taxpayers could also file their taxes with an e-filing system.

For selling or transferring, taxpayers will have to take the total income and deduct it from the capital and exemptions. Only profit will be calculated.

Q: Can taxpayers carry forward a loss from the previous tax year for deductions in the next tax year?

A: No, they cannot seek deductions for a loss from the previous year.

Q: How do taxpayers prepare documents to submit PND90?

A: Taxpayers have to calculate the profit from trading and prepare documents to prove the amount of capital from trading, which are:

• The amount of buying or selling
• The value of cryptocurrencies or digital tokens at the transaction date
• The exchange rate of the currency
• Information of buyers or sellers (if you have)
• Tax invoice or receipt of expenses
• Withholding tax certificate (if you have)

Q: What is the penalty if taxpayers do not submit their tax returns?

A: They will have to pay an additional 1.5 per cent per month in case of late payment.

If the official sends a tax summons and taxpayers have not completely submitted the tax returns, they will also have to pay a fine up to one or two times according to the case.

They will be fined up to 2,000 baht in case they do not submit the PND90, PND91, and PND94 in time.

If taxpayers submit faulty information, engage in fraudulence, artifice or other similar behaviour to evade or attempt to evade tax, they shall be subjected to imprisonment from three months to seven years and penalty from 2,000 baht to 200,000 baht.

If taxpayers do not submit their returns to evade tax, they will be subject to imprisonment up to one year and a penalty up to 200,000 baht, or both.

The department suggested that taxpayers collect evidence from every source to prove their source of income and calculate taxes.

The department added that there is no law for cryptocurrency exchanges to send information to the department. However, investors could ask transaction information from them to calculate taxes.

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