In Thailand, capital gains refer to the profits earned from the sale or transfer of capital assets, such as real estate, stocks, bonds, and securities. These gains are typically categorized into short-term and long-term capital gains based on the holding period of the asset:
- Short-term Capital Gains: Gains from the disposal of assets held for less than one year.
- Long-term Capital Gains: Gains from the disposal of assets held for more than one year.
Taxable capital gains in Thailand are calculated by subtracting the acquisition cost and allowable expenses from the selling price of the asset. The formula for calculating taxable capital gains is as follows:
Taxable Capital Gains = Selling Price - (Acquisition Cost + Allowable Expenses)
Allowable expenses may include expenses directly related to the sale or transfer of the asset, such as brokerage fees, legal fees, and transaction costs. Additionally, any improvements made to the property that enhance its value may be deducted from the acquisition cost.
The tax rates applicable to capital gains in Thailand vary depending on the type of asset and the holding period. As of the tax year 2022, the tax rates on capital gains are as follows:
- Long-term Capital Gains: Subject to a flat tax rate of 20%.
- Short-term Capital Gains: Included in the individual or corporate income tax calculation at the applicable tax rates.
- Most types of capital gains are taxable as ordinary income.
- Capital gains on the sale of shares listed on the Stock Exchange of Thailand are exempt from tax, provided that the sale is made on the exchange.
- Gains on the sale of investment units in a mutual fund are also exempt.
- Capital gains and investment income earned by a resident from sources outside Thailand are not taxable unless remitted to Thailand in the year of receipt.
- Cryptocurrency gains are subject to Thailand’s progressive tax as part of assessable income, with a 15% withholding tax on profits or benefits from holding or possessing digital tokens or gains from the transfer of cryptocurrencies or digital tokens.
The taxation of capital gains in Thailand is governed by the Thai Revenue Code (B.E. 2489). Specifically, the treatment of capital gains is outlined in Section 40(5) of the Revenue Code, which states that gains derived from the sale or transfer of capital assets are subject to taxation.
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