Investing money people often forget about the taxes, while the capital gain is taxed in many countries. That is why trading cryptocurrency or any other financial instrument you should get to know your local tax law. In this article, we go over taxation policies in four Southeast Asian countries where SimpleFX services are available and popular - Indonesia, Philippines, Thailand, and Malaysia.
As we go through crypto tax requirements, the guide also touches upon general outlook of cryptocurrencies trade industry in these regions. Do take into account that the environment for crypto changes rapidly, and a new tax bill may appear anytime. That is why you should follow our blog (and this post) for further updates and information.
Crypto Trading Taxes
Following the 2017 crypto boom at the end of the year, various regulative bodies took different stances towards coin investments. Some, like Bangladesh, outright banned digital assets, including investments and trading activities that are even remotely connected with cryptos. However, the majority of Asian countries decided to embrace new technology and allow people to experiment with blockchain solutions and trade cryptocurrencies.
As with any other activity, once trading digital money is legal, the profits made by businesses and individuals get taxed.
In most cases (if not all), cryptocurrencies fall under the commodities or online assets categorization, drawing income and capital gains taxes. CFD trading - like the one offered by SimpleFX - is of no different consideration so far.
Crypto Trading Taxes in Indonesia
In June this year, the Central Bank of Indonesia declared that cryptocurrencies are part of the commodities classification, under the Indonesian financial laws. It means that, rather than a legal tender, it is an asset that can enter the trade markets and carry taxes accordingly. Traders find that same law applies for cryptocurrencies, as they do for gold and other precious metals.
Current tax rate stands at 25% for businesses and up to 20% for individuals, the same as with commodities trading. Depending on the income level, our clients can even make off without paying anything but only if their investment profits are low enough on yearly basis. For our clients, it is important to mention that Indonesia employs different tax rates depending on the value traded. The annual income tax from crypto trade differs depending on the level of profit achieved, with rates being:
|Tax Free||Up to Rp54,000,000||0%|
|Band I||Up to Rp50,000,000||5%|
|Band II||Rp50,000,000 to Rp250,000,000||15%|
|Band III||Rp250,000,000 to Rp500,000,000||25%|
|Band IV||Above Rp500,000,000||30%|
Now, the important aspect of the tax reporting here is the currency you choose to evaluate your trades at SimpleFX. Most of the people work with US dollar, meaning that conversion is necessary. Take into account the day you made the trade and calcite your income through average exchange rate between USD (or any other currency used) and Rp.
Crypto Trading Taxes in the Philippines
The Philippines is yet to release a specific taxation policy regarding cryptocurrencies, as the market is still in the development stage. However, under the unofficial level, the government sees digital coins as online assets. At the same time, due to the lack of regulations, many might think that taxation is not necessary for this aspect. And they would be very wrong.
Authorities clearly stated that any sort of operations bringing in profits for the business or individual is a subject to income tax. Thus, if you happen to trade coins while living in the Philippines, you should expect to pay from 20% to 35%, depending on the income (profit) level. On the other hand, businesses pay 25%.
Much the same rules apply at the Philippines when it comes to evaluation. Use exchange rate of Philippine Peso to USD on the day you made a transaction.
Crypto Trading Taxes in Thailand
Thailand made things quite simple when it comes to crypto trade taxation. You make a profit – you pay a tax. There are no specific policies set in place for digital currencies but they are seen as intangible assets. Thus, clients at SimpleFX pay a progressive tax rate of up to 35%, depending on the income level form the crypto investments. Businesses pay 25% instead, which is practically the same as all other countries mentioned in this article.
It is worthy to note that the increase in the value of the coin is not taxable but the increase in profits is. So, if you hold coins in the balance for some time, you will pay the same amount of tax when trading them, allowing you to make different strategies along the way.
Unfortunately, Thai Baht is not as popular fiat currency as USD is, meaning that many platforms, SimpleFX included, do not support it. Exchange rate needs to be applied when calculating your annual tax rates. Make sure you match exchange values on the days of transactions to properly construct your income.
Crypto Trading Taxes in Malaysia
Much the same as in other regions, Malaysian clients still need to pay income taxes for crypto trading activities. Profits from activities within SimpleFX are taxable at the progressive rates, with the table found in this document showing the sequence of the income level taxes. Clients would pay up to 26% while businesses have 25% fixed.
What makes this country interesting, however, is the fact that if you decide to purchase and sell goods/services through cryptos (outside of trading), inventory taxation, and VAT rules are applicable.
As for the trading income estimations, keep in mind the exchange rate expressed in the currency you worked with. Ringgit (RM) trading is rare to find these days, with most investors trading USD. Swap the value into the domestic fiat at the end of the year to get your final income in RM.
Now you know what tax rules apply for cryptocurrency trade at SimpleFX or in any other platform, for that matter. It is evident that governments take very similar, if not the same, approach to taxation of digital assets. Most governments implement progressive tax rates, ranging up to 35% for individuals.
Our clients also have the option of employing one of the platforms to make regular tax calculations. However, we would recommend making own databases as well, as to track the amount due to the tax authorities at the end of the year.