Most digital platforms expected to fall in line regarding VAT registration

Google Thailand issued a statement saying they are willing to follow the VAT law. Meanwhile, Facebook Thailand as well as Netflix and Microsoft declined any comment.

According to a technology expert, most foreign operators would register and abide by the law as Thailand is considered one of the big markets. However, they are waiting for more details on the e-service law, which is expected to take around one year before it comes into effect.
Pathom Indarodom, president of Digital Development Foundation, said that he agreed with the e-service law and believes that all digital platforms with a large market in Thailand will follow such law. It will surely affect the cost of the service and content provider.

“The Finance Ministry has assured that the move will not affect customers who pay for the service. But in real life, the service operator needs to make a profit and needs to change some price to reach the profit target,” said Pathom.

He said that Thai people had no choice, as the Covid-19 outbreak had changed the lifestyle of people to use more of the digital platform. The state needs to provide protection to consumers too, he said. When the state applies this law, it should use data accumulated by these foreign platforms to benefit the country. Beside tax benefit, Thailand should acquire statistical data (non-personal information) from these companies to chalk out the country's digital strategy.

"The digital community has made this case for many years. We are glad about the tax measures. But it is still not the ideal situation, because there are minor issues that need to be tackled before the government can issue the law," said Pathom.

Pawoot Pongvitayapanu, member of the Electronic Commerce Association of Thailand, said he believed that foreign platform operators would comply with the E-Service laws in Thailand because the whole world uses that kind of law, and this law is considered ‘fair’.

Income tax payment data on Creden.co of foreign digital platform providers who are registered as a juristic person in Thailand found that Facebook (Thailand)'s total revenue in 2018 was Bt252.87 million and it paid Bt8.9 million in income tax.

Google (Thailand) had an income of approximately Bt782.3 million in 2018 and paid income tax of Bt18.177 million. EBay Marketing (Thailand) had total revenue of Bt23.41 million in 2018, paying Bt182,222 in income tax.

Ekniti Nitithanprapas, director-general of the Revenue Department, said he expected VAT collection from this law to be approximately Bt3 billion and likely double during the Covid-19 crisis since more people in the country are using online services through various platforms.
He said foreign operators that provide electronic services to users in Thailand must be registered just like Thai businesses if the income exceeds Bt1.8 million per year.