More e-commerce firms to enter formal tax system

Director-general Prasong Poontaneat said his department had been providing knowledge and information about such issues and persuading e-commerce operators into the formal tax system. At present, about 90,000 of them are outside the system, all in retail.

In 2012, the department inspected 1,300 e-commerce operators and some breaches were found, and nearly Bt100 million in fines levied. Currently, about 600-700 operators are being audited. 

“We want to promote these business operators’ stable growth. If they have to pay a lot of tax, their confidence will be eroded. Therefore, we support accurate tax payment,” he said. 

For example, an operator earned Bt2 million in annual income with net profit of Bt100,000. This operator was required to make a three-year retrospective tax payment plus a Bt700,000 fine. If the operator had a correct understanding about taxation requirements, those costs would have been much less, Prasong said.

Last year, there were about 900,000 e-commerce operators, or which 145,000 were in retail businesses. About 90,000 have not been included in the formal tax system yet. 

“We have information on all operators as we coordinate with financial institutions on money-transfer data for trade. If we were to enforce the rules strictly, there would be no reconciliation. However, we want to promote operators’ growth with a positive attitude. We don’t want [retroactive] tax payments with fines, as that would affect the liquidity for business operations,” Prasong said.

Pawoot Pongvitayapanu, president of the Thai E-Commerce Association, said that normally, e-commerce businesses paid tax normally. However, there are a lot of small merchants conducting e-commerce without setting up as a legal company or personal business. They are selling goods over websites or social networks such as Facebook and Instagram. 

 

Unknown factors 

It is not known how many of them there are or how much revenue they earn. This kind of e-commerce is expected to be targeted by the Revenue Department. 

“The association would like the Revenue Department to work with us to encourage small e-commerce operators to pay tax rather than the department doing this alone,” Pawoot said. 

“Small e-commerce operators are afraid of the department’s actions. Some of them have shut down, since they are afraid of the taxes they might have to pay. 

They gave up without learning about e-commerce tax, how they can benefit by paying tax rather than shutting down over fear of tax. Many of them do not have knowledge about tax. 

“We are willing to work with the government to educate and encourage e-commerce operators pay tax. We would like to see the healthy growth of lawful e-commerce business in Thailand,” he said.