On 1 September 2021, the Thai e-service VAT law became effective. This law requires non-resident service providers and electronic platforms (with income of more than THB 1.8 million per year) to register for VAT, file VAT returns, and remit VAT to the Thai Revenue Department (TRD) on a pay-only basis (i.e. without deducting input tax or issuing a tax invoice). It applies to those providing e-services to non-VAT registered customers in Thailand where the service is used in Thailand.
To prepare for implementation, the TRD opened pre-registration of VAT for e-services on 16 August 2021. The following sub-regulations, guidance, and FAQs have also been issued to supplement this law:
1. Ministerial Regulation No. 377, which states that the procedures and communications between the TRD and e-service VAT operators will be done electronically. Once the e-service VAT registration is approved, the TRD will announce the list of registered operators on its website (instead of issuing a VAT registration certificate). This is considered the same as the e-service VAT operator displaying the VAT registration certificate in a prominent place as required under the Thai Revenue Code.
2. Notification of the Director-General re: VAT No. 239, which prescribes the format of the output tax report, and details of transactions in output tax reports, for e-service VAT operators.
3. Notification of the Director-General re: VAT No. 240, which enables the e-service VAT forms to be the VAT forms under the Revenue Code.
4. Notification of the Director-General re: VAT No. 241, which prescribes the documents required, and approval criteria for, e-service VAT registration and change of e-service VAT registration.
5. Notification of the Ministry of Finance No. 69, which prescribes that TRD officers will be the assessment officials regarding e-service VAT.
6. Notification of the Ministry of Finance regarding extension of e-service VAT filings to the twenty-third day of the following month.
7. Guide on VAT on Electronic Service Provided to Non-VAT Registrants in Thailand by Non-resident Business Person (the "Guidance"), which provides further details about the e-service VAT for reference by e-service VAT operators, officers, and users.
8. FAQs, which provide a basic understanding about the e-service VAT law and the effect on users in Thailand.
We understand that revised Guidance and FAQs are still to be issued. The next question for operators and practitioners should be how intensively the TRD will apply this e-service VAT in terms of tax audits, assessments, and legal enforcement.
Following the path of other countries, the e-service VAT law is the first step in an attempt to tax foreign e-commerce operators. Challenges in the next few years will likely be focused on the potential imposition of direct tax on foreign e-commerce operators.