January 21, 2022 – at the Economic Situation Management Committee Meeting on the Effects of the Outbreak of Coronavirus, led by H.E. General Prayut Chan-o-cha, Prime Minister of the Kingdom of Thailand, received an update on the capital gains tax exemption measure by the Digital Council of Thailand (DCT) and its partners, led by Mr. Suphachai Chearavanont, Chairman of DCT. The update is a follow-up on the proposal that was approved by the Prime Minister since the end of 2021. DCT has reported the success of the collaboration with the Ministry of Finance and the Revenue Department in issuing a royal decree on “0% Capital Gains Tax”, as one of the measures to attract foreign investment, empowering Thai startup entrepreneurs and enhancing the ability to compete with neighboring countries. This law is expected to be promulgated around the first quarter of this year.
Mr. Suphachai Chearavanont, Chairman of DCT reported in the meeting regarding the implementation progress in which DCT together with the Revenue Department and related government agencies such as National Science and Technology Development Agency (NSTDA), National Innovation Agency (NIA) and The Securities and Exchange Commission, Thailand (SEC) was drafting a decree exempting capital gains tax for investment in Thai startups. Currently, it is in the process of proposing the draft decree in accordance with the law by the Revenue Department. In addition, DCT has proposed to organize a roadshow led by the Prime Minister to maximize the usage of the new measure by targeting local and international investors and startups throughout the year. The focus is on target industries such as agriculture, fisheries, and soft power including movies, sports and e-sport. The plan includes the establishment of a support center with services such as investors and startups consultation service, and coordination with the government on related matters including information and guidelines on how to use the tax benefits. DCT believes that the capital gains tax exemption measure and the aforementioned activities will create up to 5,000 new Thai startups by 2022, which is an important part in Thai economy acceleration, arisen from the collaboration of all sectors.
“It is a success and an important first step in attracting both Thai and foreign investors to invest in Thailand, creating added value for the Thai economy. From now on, DCT will expedite the full coordination in the issuance of this decree so that the investment promotion policy in technology, innovation and startups for Thai entrepreneurs will become concrete promptly. In addition, DCT continues its commitment to the development of a strong ecosystem by focusing on the development of digital manpower to meet international caliber, aiming to develop the advanced digital skill group of 3.5 million people by 2027. Standards and courses with certificates for advanced digital skills will be created to promote the development of manpower skills. Moreover, this development will be enhanced by the creation of certified platforms and content development, as well as the attraction of highly skilled experts from all over the world. This will stimulate the development and increase the number of advanced digital workforces in the future.” Suphachai said.
In this regard, the Economic Situation Management Committee Meeting on the Effects of the Outbreak of Coronavirus has approved the investment promotion measures for technology businesses and startups. DCT, Ministry of Finance, and Revenue Department have been assigned to finish the amendment of the royal decree issued under the revenue code governing the exemption of income 2016 (No. 597) and 2017 (No. 636), and to report the progress to the secretary and committee members within 30 days. Furthermore, DCT has been assigned to lead discussions with Ministry of Higher Education, Science, Research and Innovation, Ministry of Labor, Institute of Professional Qualifications, Ministry of Education, Ministry of Finance, and related agencies to jointly integrate, determine, and develop the nation's digital manpower development guidelines.
Mr. Sarun Sutuntivorakoon, President of Thai Venture Capital Association (TVCA) and Partner of N-Vest Venture Co., Ltd said “Capital Gains Tax Exemption Act is the fundamental incentive that is greatly necessary in improving the investment potential for startups and tech companies, as well as increase their competitiveness abroad. It may not be the factor for an immediate attraction of foreigners to relocate, however it is a good starting point for Thai startups to grow and compete with other countries. It will enable Thai startups to attract potential talents from around the world to create more value for their businesses.”
Mrs. Nichapat Ark, Director and Thailand Coverage of Openspace Ventures, as a representative of Thai and foreign investors, said “This Capital Gains Tax exemption will help attract more investments into Thailand. The decision to invest in startups involves many factors which include business planning, potential of the startup, market size, return on investment, as well as the tax policy of the country. Therefore, this measure is a good example of how public and private sectors can work together for the benefit to the country.”
DCT continues to focus on promoting the investment for technology businesses and startups in Thailand. This is considered a great collaboration of all sectors, including the relevant government agencies, the private sector, and relevant groups of Thai and foreign investors. DCT will continue to push the issuance of Capital Gains Tax Exemption Act and maximizing its usage creating positive impacts on various dimensions of the sustainable digital economy of Thailand.