The Thai government has approved a draft bill on Tuesday that will require foreign digital service providers to pay value added tax, making Thailand the latest country in ASEAN to adopt such measures to bolster tax revenues from international tech companies such as Google, Facebook, and Alibaba.

While the bill has been approved by the Cabinet, it still awaits approval from the Thai parliament and promulgation before it goes into effect. Once the bill passes, non-resident companies and platforms providing internet services in the country that earn more than 1.8 million Baht (approximately US$57,500) per annum will be required to pay 7% VAT on sales. Internet services include gaming, e-commerce, hotel booking, and media streaming platforms.

The rationale behind this move, according to deputy government spokeswoman Ratchada Thanadirek, is to ensure fair taxation across the board given that Thai digital service providers are required to pay 7% VAT. Thailand, which has one of the fastest growing internet economy in the region, expects to earn around 3 billion Baht (approximately US$95.8 million) from the bill.

The upcoming VAT bill comes as part of a push by governments around the world to tax companies providing digital services which economists say could see significant revenue growth as people stay or work from home due to the COVID-19 pandemic.

Silk Legal will continue to monitor developments surrounding the bill and will provide updates accordingly.