In a last-minute change ahead of the implementation of new tax rules for virtual currency trading, Thai lawmakers have announced that virtual currency trading on regulated exchanges should be exempt from value-added tax.
Under the new regime, gains will be subject to a 15 percent capital gains tax charge, with the tax to be subject to withholding, and a seven percent value-added tax charge will be assessed where trades take place off an approved exchange.
The introduction of tax comes alongside a new regulatory regime for the sector, with new value-added tax registration obligations arising for many industry players.
Interestingly Cryptocurrency Trading is an activity which lends itself well to an Offshore Corporate Structuring Plan.
If you are resident in and trading Cryptocurrency from Thailand (or somewhere like Thailand which has brought in a Cryptocurrency Trading Tax Regime) it may be possible to trade under the guise of a (tax free) Offshore Company and avoid tax at home on your trading profits
To summarise how it would work (assuming you intend to trade your own money or borrowed money) is:
- You set up a zero tax International Business Company
- The IBC opens an account with the Cryptocurrency Exchange/s
- The Company is set up with a (nil tax jurisdiction resident) Nominee Director and a (nil tax jurisdiction resident) Nominee Shareholder (alternatively, and for maximum privacy, a tax free Private Foundation or Trust could be to set up to hold the IBC’s shares).
- You are appointed as the IBC’s authorised trader (ie you place the buy and sell orders on behalf of the company)
- For all intents and purposes the IBCs trading profits are generated in a nil tax environment tax free/offshore (ie provided the IBC Is structured properly)
- When you need some living/spending money the IBC pays you a wage, or consulting fees or a commission (eg a percentage of trading profits generated) and you pay tax at home on those earning. That living/spending money can be paid to your local bank account (which means it would be assessable income wherever you are tax resident though you should also be able to claim a sizeable amount of allowable deductions eg for home office, car, equipment, insurances, travel, stationary etc etc to reduce the amount of your “taxable” income at home)
- If you don’t want the authorities to know how much money you are earning by way of wages you could use an anonymous ATM or Debit/VISA card to withdraw your wages/fees from an Auto Tele Machine
- The majority of your trading profits can be banked and or reinvested Offshore potentially tax free.
Local/new laws can have an impact. Hence you should seek local legal, tax and financial advice before incorporating an IBC for such purposes.
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