While many governments are still trying to figure out how to implement blockchain technology, Thailand’s government is already leveraging distributed ledger technology to improve its tax collection system.
The head of the Revenue Department of Thailand has said that blockchain will be used to verify whether taxes have been paid correctly, as well as to accelerate the tax refund process. The department will also deploy machine learning to fight against tax avoidance by tracking refunds and streamlining the tax collection process, reported Bangkok Post.
Taxes on the blockchain
Thai officials maintain that a digital tax collection system based on disruptive technologies remains a government priority though there is no roadmap revealed as to when the blockchain initiative will go live. Putting taxes on the blockchain will allow the government to directly interact with taxpayers without the need for tax agents as well as reduce its administrative burden and lower its tax collection costs. Data collected over time will be immutable, transparent, and more accurate which will make it more easier for tax authorities to identify errors or frauds but also more difficult for citizens to evade taxes. Additionally, by combining distributed ledger technology with artificial intelligence (AI), tax authorities have the ability to ‘train’ AI enabled machines to track citizens’ tax behaviour, something that could help to uncover cases of tax fraud.
The government of Thailand collects 15 percent capital gains tax on profits made from buying and selling digital tokens. However, reporting the gains made from a trade is largely the responsibility of individuals who conduct such trades.
Thailand putting a lot of emphasis on blockchain
Thailand has emerged as one of the most blockchain-friendly countries in Southeast Asia. The country has attracted foreign blockchain companies to the region by making it easier for firms and exchanges to work with local regulators. For instance, regulators have been working to provide a legal path for blockchain and cryptocurrencies to encourage investments. In addition to legalizing cryptocurrencies, Thailand’s Securities and Exchange Commission has permitted a limited number of cryptocurrency exchanges, digital token insurers, and broker-dealers to operate in the Kingdom. For Thailand, taking an open-minded approach to blockchain and cryptocurrency has been very helpful to attract foreign companies to the region.
Not only has the country become open to blockchain companies, but its government is also exploring its own blockchain initiatives. In September, the Ministry of Commerce announced it is preparing to bring decentralized technology solutions to trade finance, agriculture and copyright sectors by using smart contracts to process digital IDs, manage IP registrations and improve security of transactions. IBM and Bank of Thailand, Thailand’s Central Bank, announced they will be seeking to promote blockchain and AI in order to help local businesses digitalize their operations and turn Thailand into a major sales hub. Early this month, Thailand’s Democratic Party used a blockchain-based e-voting system to elect its leaders in a primary election, becoming the first political party to do so.
Bank-led blockchain projects have also been making headway in Thailand. As reported recently, Thailand’s fourth largest bank Kasikornbank joined Visa’s B2B Connect platform to provide its customers with blockchain-powered solutions for cross-border payments.