(TheLibertyRevolution.com)- Reuters reported last week that thanks to a new law that went into effect on September 1, Thailand would begin collecting a value added tax (VAT) from foreign technology companies. With the implementation of this VAT, Thailand hopes to raise at least five billion baht ($154.7 million) in additional annual revenue.
According to Thailand’s Finance Ministry, e-services subject to this legislation include e-commerce platforms, online advertising, online accommodation booking, online music and film streaming, online games as well as applications.
Accordingly one hundred major international digital platforms now fall under this new obligation — including Apple, Google, Facebook, Netflix, Line, YouTube and TikTok. Thus far of the one hundred companies targeted for this VAT, sixty-nine companies have registered.
This law stipulates that foreign electronic service providers and electronic platforms which receive income of more than 1.8 million baht per year from providing electronic services to non-VAT registered customers in the country are obliged to register for VAT, file VAT returns and pay VAT by calculating output tax.
Finance Minister Arkhom Termpittayapaisith noted VAT collection will cast a light on income the foreign operators earn in the country, which can be used for calculation for any tax regime that could come up in the future.
According to director-general of the Revenue Department Ekniti Nitihanpraphas, the 5 billion baht target is the minimum projected because that target goal was derived before the pandemic.
Currently Thailand collects about 800 billion baht annually from value added tax.
Two week ago the Thai government approved an extension of the current 7 percent VAT rate through September 2023. Thailand’s value added tax rate has been at 7 percent since the 1997-98 Asian financial crisis.
Thailand is following in the footsteps of more than sixty other countries across the globe which collect value added tax from foreign e-service operators – including Australia, New Zealand, Japan, Taiwan and South Korea. These countries comply with guidelines ushered in by the Organization for Economic Cooperation and Development to enhance VAT collection for cross-border services.