On 9 June 2020, the Cabinet approved a draft act amending the Revenue Code to impose VAT on foreign-based operators that provide services to customers not registered for VAT in Thailand through an electronic media or digital platform.
Keywords: Mazars, Thailand, Tax, VAT, e-Services, National Legislative Assembly, Royal Gazette, Revenue Department
9 July 2020
Under the draft Act, an overseas business operator providing electronic services to customers who are not VAT registrants in Thailand and use the services in Thailand are required to register and pay VAT in Thailand if they derive revenue of more than THB 1.8 million a year from providing such services. If the overseas business operator provides electronic services to customers in Thailand through foreign digital platforms, the owner of the digital platform is required to register and pay VAT on behalf of the overseas business operator. VAT registration can be done electronically.
The tax base used for calculating VAT would be the total amount of revenue earned by overseas e-business operators or overseas digital platform owners from electronic services provided to customers not registered for in Thailand. However, even if these entities registered for VAT in Thailand, they would be prohibited from issuing tax invoices to customers. In addition, when calculating their VAT liability, they would not be allowed to set off any input VAT paid on expenses against output VAT.
The draft act must be submitted to the National Legislative Assembly for approval before it is published in the Royal Gazette in order to become effective. After that, the Revenue Department is expected to issue further regulations and guidelines to provide more clarity on certain issues, such as enforcement mechanisms and penalties for non-compliance.