Approved by the Thai Cabinet in June 2020, amendments to the Revenue Code will soon come into effect, meaning foreign businesses providing digital services in Thailand that have an annual income of more than THB 1.8 million (approximately US$60,000) will soon be required to pay 7% VAT. The Act specifies that markets, channels, or platforms that provide e-services (including intangible commodities) delivered through an internet network, electronic network, or otherwise delivered using information technology, will be subject to the amended regulations. Thailand-based service providers involved in e-commerce platforms, gaming, e-payment services, and/or digital marketing should therefore take note of this upcoming regulatory development which is expected to take effect on 1 September 2021.
Through these amendments, the Revenue Department hopes to ensure fair taxation among participants in the digital economy, particularly as large digital platforms that are based overseas, namely Google, Line, Netflix, and Facebook, have largely been exempt from paying VAT in Thailand. Thai digital service providers would therefore be able to compete with their overseas counterparts on a level playing field, according to Director-General Ekniti Nitithanprapas.
What does this mean for digital service providers in Thailand?
The primary piece of legislation that governs the VAT obligations of Thailand-based digital service providers is S. 83 of the Revenue Code which stipulates that a VAT registrant is required to file a tax return monthly before the 15th day of each month at their local district or sub-district office. Those operating in multiple locations within Thailand can opt to either file their tax returns separately in each of their areas of operation or request for joint filing at any one of their corresponding district or sub-district office.
For service providers who are based overseas but serving customers in Thailand, registrations and VAT submissions can be made online through the Revenue Department’s website, where they can pay the taxes owed without needing to prepare tax invoices or reports. However, as set out in S. 82(2) of the Code, an employee or agent residing in Thailand can likewise file for VAT on the company’s behalf. This option may be preferable for overseas companies given that the Revenue Department’s website is only in Thai (as of February 2021). This also applies for overseas companies temporarily providing services in Thailand without a VAT registration which, according to S. 82/13, is liable for VAT.
These latest obligations may increase paperwork for digital service providers who fall under the requirements of this amendment. Digital businesses should consult an accounting professional regarding their tax obligations under the Thai government’s new requirements.
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