Background

On 9 June 2020, the Cabinet of Thailand approved a bill amending the Revenue Code to impose a value added tax (the "VAT") on overseas providers providing services through digital platforms ("e-Services") into Thailand (the "Bill"). This amendment is intended to apply to e-Services such as e-commerce, marketing and advertisements, games and applications, movies and digital content, airlines and hotel agents, cloud computing, investments and gambling.

The key details of the Bill are summarized below:

  1. An overseas provider providing services through electronic means to its non-VAT registered service recipients (socalled business to customer transactions (B2C)) in Thailand will be subject to the registration and imposition of the VAT if the annual income received from such e-Services in Thailand is over 1.8 million THB. Examples of these kinds of overseas providers are Netflix, Spotify and Facebook.
  2. A foreign digital platform operator with an annual income of over 1.8 million THB will be subject to the registration and imposition of the VAT if an overseas provider provides services through such foreign digital platform to customers in Thailand. In such case, the annual service fees collected from customers in Thailand by such overseas provider shall be the basis for the VAT imposed on the foreign digital platform operator. Examples of these kinds of foreign digital platform operators are Google Cloud Platform, Microsoft Azure and Amazon Web Services.
  3. Online recognition and acceptance of filings and submission of applications and any documents relevant thereto will be possible.

The imposition of the VAT under the Bill is anticipated to enhance the efficiency of taxation in Thailand and increase the fairness between overseas and domestic providers of e-Services. Please note that the principle intent of the Bill is to collect the VAT from the aforementioned overseas providers and is not to reform the whole taxation system for electronic or digital related businesses. An additional point of interest will be how the government plans to enforce this new law on those overseas providers of e-Services as the Ministry of Finance expects to collect an additional 3 billion THB in taxes per year from the enactment of this Bill.

The Bill will be proposed to the National Assembly for further consideration and will come into force after it is affixed with the King's signature and published in the Government Gazette. Currently, the precise timeline still cannot be predicted and the details of the Bill are subject to further modification; however, we will keep you updated on this matter.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.