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On 9 June 2020, the Cabinet approved a draft act to amending the Revenue Code to collect value-added tax (VAT) from foreign electronic service (e-Service) providers and foreign digital platforms as proposed by the Ministry of Finance and the Revenue Department.
The amendment aims to improve and further develop the Thai tax system to meet international standards, as well as regulate fair competition between Thai operators and foreign e-Business operators that provide services in Thailand.
Key highlights under the draft Amendment to Revenue Code are as follows:
Persons liable to VAT
- Foreign e-Service operators and overseas digital platform owners (“foreign suppliers”) that receive an income more than THB 1.8 million per annum from provision of services (over digital e-Services or electronic platforms) to recipients in Thailand who are non-VAT registrants.
VAT Registration
- VAT registration shall be compulsory for foreign e-Service operators and overseas digital platform owners that are subject to VAT under this amendment act.
- VAT registration can be done electronically.
VAT Liabilities and Responsibilities
- As VAT registrants, foreign suppliers shall be liable to pay VAT on such income received from the service recipients in Thailand who are non-VAT registrants, and file VAT returns on monthly basis to the Thai Revenue Department by e-filing system.
- Such foreign suppliers who provide electronic Services outside of Thailand and where such services are used in Thailand by non-VAT registered recipients are prohibited from issuing tax invoices to those recipients. In addition, no input VAT offset is allowed in the calculation of VAT liabilities.
Definitions Amendment/Adding
The term of “Goods” has been revised and the terms of “Electronic Service” “Electronic Platform” have been also added to the Revenue Code, as follows:
- “Goods” means corporeal or incorporeal property susceptible of having a value and of being appropriated whether or not for sale, use or any purposes, and shall include every imported item, but excluding incorporeal property that can be delivered through the internet network or other electronic networks.”
- “Electronic Service” means a provision of service that is delivered through the internet network or other electronic networks that the nature of service is essentially automated, and such service cannot be completed without information technology.
- “Electronic Platform” means markets, channels, or other processes that service providers use to provide electronics services to service recipients.
Further steps, the draft amendment act will be sent for parliamentary approval prior to being published in the Government Gazette, and the Thai Revenue Department will prepare/issue ministerial implementing regulations and information guides for the public.
Note that this tax update contains general information in summary form. Therefore, it is only intended for use as general guidance and should not be used to determine the issues without obtaining professional advice to your specific case.