PayPal Holdings, Inc. (Paypal), located in the United States, is one of the world's most famous online payment platform providers. It has been registered as a juristic person in Thailand under the name of ‘PayPal (Thailand) Company Limited’ (Paypal TH) since 2016, and it recently announced that it will open for service in Thailand again. The announcement also stated that it has modified its terms of service in order to comply with the laws of Thailand, which affects the users of Paypal in Thailand.

When using the Paypal service, users can choose to register for two types of account: Individual Account and Business Account. Paypal requires users who apply for an account before 7 March 2021 to verify their identities and accept the new terms and conditions. The new terms and conditions will be effective for all users as of 18 February 2022. Users who will be affected the most may be the users who operate their own business under the Individual Account, because the functions related to receiving payments and transferring money into a bank account will be removed from the Individual Account; however, such account will still be able to be used to pay for goods and services the same as before. Therefore, if users still wish to receive payment for goods or services through the Paypal platform, the users are required to register for a Business Account and to submit documentary evidence, such as a commercial registration book.

From the terms and conditions above, Paypal uses the term 'commercial registration', which according to Section 5 (4) of the Commercial Registration Act B.E. 2449 (1906) stipulates that: “Commercial operator” means “a natural person or a juristic person who conducts business as a normal occupation, and shall include a partner with unlimited liability, a director or manager as well.” Therefore, a natural person can submit a request for the commercial registration at the Department of Business Development (DBD)to be used as evidence for opening the Business Account with Paypal. Even though the DBD and the Revenue Department are different government agencies, if an individual registers the business, the Revenue Department may however know about the business operation from the registration system and may therefore conveniently monitor whether or not the business operator has properly filed taxes.

In addition, another important change is that, when the service fees are charged upon the users receiving payment for goods or services from their customers through the Business Account of Paypal; Paypal will collect VAT on said service fees. This change is a result of the Thai government's amendment to the law relating to electronic services from abroad, or E-service law, in accordance with the recommendations of the Organisation for Economic Co-operation and Development (OECD). The E-service law stipulates that foreign business operators or foreign electronic platform operators must register and remit VAT to the Revenue Department, which is effective as of 1 September 2021.

The law was amended on this issue because, originally, for services similar to Paypal, i.e. a service of a foreign operator performed in a foreign country where such services are used in Thailand; it shall be deemed under tax law as that the service is provided in Thailand. Consequently, such service operators are obliged to pay VAT. In this regard, the Revenue Code stipulates that service recipients in Thailand, whether they are natural persons or juristic persons, are obliged to remit VAT within the 7th day of the month following the month in which payment is made for said service. However, the VAT remittance on behalf of foreign operators still has low rates and it is difficult to assess taxes because it is mostly a service provided to an individual person. This uneven and unequal VAT remittance creates unfair tax collection and treatment for entrepreneurs who correctly remit VAT. Therefore, the Thai government decided to amend the law and prescribed that, for business operators or foreign platforms who derive income in Thailand from providing electronic services to users who are not VAT registrants of more than Baht 1.8 million in the same accounting period; said foreign service providers must submit an application for VAT registration and have the duty to remit VAT on behalf of service recipients who are not registered for VAT. If the service recipients are VAT registrants, they will not be charged VAT from using electronic services, and they will still have the duty to remit VAT on behalf of foreign operators to the Revenue Department (Phor.Phor.36 form) as usual; for which they can use the remitted VAT as input tax in the VAT filing.

However, from checking VAT registration information on the website of the Revenue Department (, Paypal’s name is not included in the list of foreign operators registered for VAT. Furthermore, the information displayed on Paypal TH's website states that Paypal TH is a licence holder related to electronic money services in Thailand. In such regard, we made inquiries to Paypal's call centre on 10 Nov 2021 and received a preliminary answer that the service provider is Paypal TH; not Paypal itself. Therefore, if the Revenue Department considers that Paypal TH is an actual service provider and the nature of such services are made and used in Thailand, Paypal TH as a business operator is obliged to remit and pay VAT from the fees charged. As a result, all users in Thailand, regardless of whether it is a Business Account or Individual Account and whether or not the users are VAT registrants. Therefore, Business Account users or those who are interested in using Paypal are advised to follow up and verify whether or not the real service provider is Paypal TH in order to perform the correct tax operation in the future.