An eCommerce Tax for Thailand; EABC members and foreign business community inputs to operational drafts and guidelines

EABC’s Digital Economy/ICT group has been engaged since 2017 with the development of an eCommerce Tax for Thailand. Amendments to the Revenue Code have been passed and now the Revenue Department is preparing guidelines, the on-line registration platform and operating procedures. The Revenue Department set up an on-line comment facility. To assist with appreciation of the issues and to achieve some consensus with responses, an information session was held on Thursday, 29th April with submission made on 30 April.

BACKGROUND NOTES

The amending law is attached (PDF). This is not a consolidated version so it can be hard to make sense of it.

There are many unanswered questions and unresolved issues in the law (it is very brief).  For that reason, stakeholders have urged the TRD on multiple occasions to provide comprehensive guidelines in English.

Examples within Asia Pac are the Singapore Overseas Vendor Registration regime and the Australian Simplified GST Registration regime – simply written guidelines that anyone should be able to understand.

The law targets foreign e-commerce companies that, generally speaking, are willing to comply with this new law and in fact, already do so in other countries.  However, what needs to be recognised is that these companies are required to comply with similar laws in many countries.  In order to ensure successful implementation (for both Thai government and taxpayers), administrative burden needs to be minimised, the rules/compliance obligations need to be in line with the OECD guidelines and sufficient time allowed to have systems ready (1 September compliance commencement date is around the corner and taxpayers do not have critical answers to prepare their systems and processes).

The new rules are only limited to B2C (or more accurately non-VAT registrants in Thailand, which can include individuals and small businesses).  Provision of services by a foreign company to a VAT registered business (B2B) would be captured by the existing reverse charge VAT mechanisms (i.e. the VAT registered business would need to self-assess 7% VAT on payment for services).

Issues:

• Some unresolved issues (e.g. scope of ‘electronic services’, how to determine that the customer is in Thailand)
• administration/compliance is in line with the OECD guidelines and ‘best practices’ otherwise the world will have multiple models making compliance difficult.
• Filing frequency – quarterly filing instead of monthly is preferred/adopted in other countries
• There should be no requirement to verify the validity of VAT ID number.
• Simplified system is ‘Pay only’ system – no input tax credit; no tax invoice issued. So what does the provider collect if anything? If it is not VAT, then can a surcharge equivalent to VAT be made?  Are there rules or accounting practices on what this can be called?

There would be no Permanent Establishment (PE) issues with using the Simplified system, there may and most likely would be with using the full registration system.

TRD is waiting for OECD developments / consensus about possible additional taxes – ‘Digital Services Taxes’. There is no plan for a direct income tax based impost for eCommerce, only this VAT proposal.

Timeline

2017 discussions on the type of tax proposed (direct or indirect?)

Feb 2018 – VAT based tax: Online submission of recommendations

Early 2020: Similar to Feb 2020;  third draft. Focus is B2C only; foreign providers with more than THB 1.8m annual revenue in Thailand should register for VAT. Simplified system, or alternatively full is registration.

October 2020:  OECDs BEPS 2.0

Status in Thailand– law is passed in early 2021, in force September 2021 with a Guideline from TRD by May.  Focus is B2C, simplified system.

The final submission is in the attachment.