MBMG Group

Thailand’s new e-Services tax liable for VAT

| Corporate Outlook July2021

e-Service Tax or Electronic Service Provider Act abroad for domestic service recipients. It is an Act approved by the Cabinet and announced in the Government Gazette on February 10, 2021 but this new tax law shall be enforced on September 1, 2021 and onwards.

According to the Amendment of Revenue Code (Issue No. 53) 2021, the overseas entrepreneurs/service providers who provide e-service via internet network, including any medium providing an online platform between entrepreneurs/service providers and customers, who have a revenue derived from e-service in Thailand more than THB 1,800,000.00 per annum, must register VAT and submit the monthly VAT to the Revenue Department (RD) under the pay-only system (no claiming of input tax) which is not allowed to issue a tax receipt but does not have to submit a report of input tax to the RD.

According to the Amendment of Revenue Code (Issue No. 53) 2021, the overseas entrepreneurs/service providers who provide e-service via internet network, including any medium providing an online platform between entrepreneurs/service providers and customers, who have a revenue derived from e-service in Thailand more than THB 1,800,000.00 per annum, must register VAT and submit the monthly VAT to the Revenue Department (RD) under the pay-only system (no claiming of input tax) which is not allowed to issue a tax receipt but does not have to submit a report of input tax to the RD.

This amendment to E-VAT rules redefined the meaning of e-Service as follows:

1. The definition of goods is excluded from intangible property transferred through an electronic network.
2. e-Services are defined as any service, including intangible property which is automatically transferred via the internet or other electronic networks, and such service cannot be rendered without information technology, for instance, online downloading of game, music, movie, or sticker.
3. e-Platform is defined as any of marketplaces, channels or any other methods used by several operators to provide e-Service to its service recipients,

On its Facebook page, the Revenue Department provides examples (in Thai language) of electronic services that fall under the e-Service Tax Law to include online downloading of games, music or movies; stickers sold in chat applications; streaming services; and advertising services on webspace or applications.

e-Service businesses expected to be affected include:

• Online streaming music, movies, series, games.
• Online shopping platform, marketplaces, channels.
• Online investments, finances.
• Online reservation of airlines, hotels, tourisms.
• Online media, advertising, applications and websites
• Sticker downloads
• Others

The Revenue Department also provided examples of the affected “electronic platforms” which included include Apple, Google, Facebook, YouTube, Line, Joox, Netflix and TikTok.

♦ HOW TO MANAGE VAT IN THE OVERSEAS?

♦ žHOW WILL E-SERVICES TAX IMPACT YOUR ONLINE BUSINESS?