Measures for the taxation of foreign e-business in Thailand were first proposed in 2017, and new value-added tax (VAT) rules have now been enacted and were published in the Royal Gazette on 10 February 2021. The new rules are effective from 1 September 2021. Their main objective is to enable the collection of VAT on electronic services rendered by e-business operators in foreign countries to non-VAT operators in Thailand. The regulations applicable to Thai e-business operators remain unchanged.

The key principles of the new VAT rules are:

Foreign e-business operators that provide electronic services to non-VAT operators in Thailand are required to register with the Thai Revenue Department to pay Thai VAT and to file VAT returns.

In cases where foreign e-business operators provide electronic services via an electronic platform operated by another party delivering a continuous service process, from offering the service to payment and to delivery, the platform operator is obliged to pay the VAT on behalf of the foreign e-business operators that use the platform, assuming the duties and responsibilities of the foreign e-business operators.

Under the new rules, “electronic services” are defined as services, including intangible assets, that are automatically transmitted via the internet or other electronic network, and which could not be rendered without such technology, while “electronic platform” is defined as any channel used by numerous operators to provide electronic services to their service recipients.

The VAT registration threshold for foreign e-business operators will be the same as for local operators, i.e., THB1.8 million (or approx. US$60,000) per annum.

For VAT computation purposes, foreign e-business operators are not allowed to claim any input tax.

Based on past public consultations, the purpose of the new VAT rules is to collect VAT on electronic/digital services provided by foreign operators, such as movie and music streaming services, digital content providers and online games.

Further details of related procedures and compliance requirements should be announced in supplementary laws, including additional guidelines that the Thai Revenue Department is expected to issue in the next several months.

___________________________________

For additional information with respect to this Alert, please contact the following:

EY Corporate Services Limited, Bangkok

Yupa Wichitkraisorn | yupa.wichitkraisorn@th.ey.com

Thitima Tangprasert | thitima.tangprasert@th.ey.com

Ernst & Young LLP (United States), Thai Tax Desk, New York

Chinumar Huk-han | chinumar.huk-han1@ey.com