Thailand Revenue Department Tax VAT e-services

Foreign Platform and Website Operators to pay VAT in Thailand

Around 20 large foreign online platform operators plan to register as value-added tax (VAT) payers in Thailand. Ekniti Nitithanprapas, director-general of the Revenue Department, announced this today, the 26th of July.

The move comes in response to enforcement of the e-service tax law from Sept 1 2020. The e-service law requires overseas businesses providing online services in Thailand to register for 7% VAT liability if their annual income exceeds 1.8 million baht.

E-service businesses liable for VAT payments include those offering download services for movies, games, stickers, brokerage services and advertisements.

He said the department already developed an online channel for operators to register for VAT and make payments easily.

As a result, most foreign online businesses are cooperating with the law, Mr Ekniti said.

He expects tax revenue collection from the upcoming e-service levy to total more than 5 billion baht per year. This revenue goal is likely to occur as the pandemic has moved traffic to online platforms.

Above all, under the tax law, operators estimate how much tax they should pay.

The department uses a post-audit process to examine their VAT payment by seeking international cooperation among their tax payment records.

Many countries are adopting VAT on online services

The new legislation aims to align Thailand with guidelines from the Organisation for Economic Cooperation and Development (OECD) titled Mechanisms for the Effective Collection of VAT/GST Where the Supplier is Not Located in the Jurisdiction of Taxation many countries have already adopted.

Around 60 countries have adopted this e-service tax. Firstly, Singapore and Malaysia were the first countries in Southeast Asia to levy VAT on digital services provided by non-residents to consumers. In May 2020, Indonesia introduced a 10% VAT on digital service providers. Following that, the Philippines and Vietnam began imposing this VAT type in their countries in January 2021.

The department is pushing for the enactment of organic laws in e-service tax law.

The details of the organic bills have been approved by the cabinet and scrutinised by the Council of State.

In conclusion, introducing the e-service tax law is part of the country’s ongoing tax reform to improve revenue and ensure fair treatment for all.

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