Approved by the Thai Cabinet in June 2020, amendments to the Revenue Code will soon come into effect, meaning foreign businesses providing digital services in Thailand that have an annual income of more than THB 1.8 million (approximately US$57,500) will soon be required to pay 7% VAT. The Act specifies that markets, channels, or platforms that provide e-services (including intangible commodities) delivered through an internet network, electronic network, or otherwise delivered using information technology, will be subject to the amended regulations. Thailand-based service providers involved in e-commerce platforms, gaming, e-payment services, and/or digital marketing should therefore take note of this upcoming regulatory development which is expected to take effect on 1 September 2021.

Through these amendments, the Revenue Department hopes to ensure fair taxation among participants in the digital economy, particularly as large digital platforms that are based overseas, namely Google, Line, Netflix, and Facebook, have largely been exempt from paying VAT in Thailand. Thai digital service providers would therefore be able to compete with their overseas counterparts on a level playing field, according to Director-General Ekniti Nitithanprapas.

What should digital service providers in Thailand take note of?

The primary piece of legislation that governs the VAT obligations of Thailand-based digital service providers is the Revenue Code which stipulates under Section 83 that a VAT registrant is required to file a tax return on a monthly basis within the 15th day of each month at their local district or sub-district office. Those operating in multiple locations within Thailand can opt to either file their tax returns separately in each of their areas of operation or request for joint filing at any one of their corresponding district or sub-district office.

For those based overseas, registrations and VAT submissions can be made online through the Revenue Department’s website where they can pay the taxes owed without needing to prepare tax invoices or reports. However, as underlined in Section 82/2 of the Revenue Code, an employee or agent residing in Thailand can likewise file for VAT on the company’s behalf which may be preferable for overseas companies given that the website is currently in Thai as of the date this article was published. This also applies for overseas companies temporarily providing services in Thailand without a VAT registration which, according to Section 82/13, is liable to VAT.

The newfound obligations may entail complications for digital service providers who fall under the requirements of this amendment. As such, it may be prudent for digital businesses to consult accounting professionals regarding their tax obligations under the Thai government’s new requirements.