Proposed eCommerce Tax

The world’s tax authorities are at varying stages of developing and implementing so-called Digital Economy taxes for cross-border on-line provision of services. Typically the tax authority in the consuming jurisdiction seeks to tax the foreign provider. This can be done by corporate income tax based on income earned from sales in the consuming jurisdiction (often with the use of permanent establishment principles) or by use of indirect taxes (eg VAT). The Thailand Revenue Department proposes to levy VAT on offshore providers by requiring them to register for Thailand VAT (above a certain threshhold). But the simplified registration system proposed would deny the use of input credits or the ability to issue tax invoices. EABC has indicated that the use of VAT may be less cumbersome overall than using corporate income tax, but is concerned about departures from the VAT ‘neutrality’ principles, which would cause distortions.
EABCs Digital Economy / ICT Working Group (with collaboration with EABCs Cross Functional Working Group) has made recommendations that a capable platform enabling full registration on-line, should be in place first before such a tax is launched.  EABC has written:

We would urge the TRD to consider this proposal in light of:

a) Thailand’s policy towards Thailand 4.0

b) The World Bank 2018 ranking is 26th which is a significant improvement from the
previous year. This was achieved by making some changes. ‘Paying taxes’ is one of
the ten criteria used globally by the World Bank for assessment of ease of doing
business. Adding complexity now to paying taxes may have an unintended result.

c) The Guillotine project, in addition to a plan to cull some of the 6,000 licences, brings
with it a new way of law making (under legislation proposed as part of that initiative)
by applying APEC ‘Good Regulatory Practice’ principles which requires tests about
aspects such as any proposed law’s efficacy, ease of use, fairness etc. Effective
consultation is also a part of this.

d) Thailand’s national policy is about digital government.