Thailand’s E-Commerce Tax

The OECD BEPS action 1 has resulted in jurisdictions acting unilaterally in implementing destination taxation rights as espoused by the OECD and in order to “level the playing field” for domestic e-commerce operators.

The second draft of the legislation requires a foreign operator that provides services used in Thailand (irrespective of the residency of the consumer) through electronic media to a non-VAT registered person to register and pay VAT if its annual VAT-able income exceed the registration threshold of 1.8 million Baht. Transactions with VAT-registered customers are already subject to self-assessment VAT such that the new law may only be applicable to B2C transactions.

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Where a foreign operator provides services through a foreign ‘platform’ (E.g. websites, applications), the platform owner is required to register for and administer VAT once the income derived by the foreign operator exceeds the registration threshold.

Foreign operators will be required to remit VAT to the Thai Revenue Department at 7 percent as well as bear the cost instead of the payer (foreign operators cannot charge VAT to customers in Thailand nor claim input tax credits nor refunds which could see them increasing the prices of supplies to consumers to absorb this cost). Where foreign operators instead chose to register their business for VAT in Thailand there could be corporate income tax consequences in Thailand. Where foreign operators do not comply they will be subject to the regular penalties, fines and surcharges. Also note that the legislation removes the VAT exemption for online shopping of goods worth less than 1,500 Baht purchased from foreign vendors outside of Thailand and shipped by mail.

The proposed legislation will come into effect 180 days after being published in the Royal Gazette with further guidance expected from the Thai Revenue Department. Whilst the implementation date is not clear, foreign operators should start preparing for the new law by the end of 2018 or early 2019.

About JNP Legal

Michael Anastasia has over fifteen years’ experience in taxation law in the Asia Pacific region and has been practising in Thailand since 2010. Currently working as Partner, Tax and Consulting at JNP Legal, he is a fully qualified CA with Chartered Accountants, Australia and New Zealand. He can be contacted at Michael@jnplegalthailand.com

JNP Legal is an international law firm based in Bangkok that offers professional and personal commercial law services to locals and expatriates both in Thailand and abroad. Specializing in corporate and commercial Law, their dedicated team assists companies and individuals with a number of key legal consultancy services. JNP Legal is a member of Dezan Shira & Associates’ Asian Alliance.

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