Sumet Mingmongkolmitr

The Act Amending the Revenue Code (No. 53) (the “Amended Act”) will soon become effective on 1 September 2021 in order to create a fair business environment between domestic and foreign service providers who provide service to customers through electronic media or a digital platform.

Previously, foreign e-service providers or e-platform operators were not responsible for filing VAT returns and remitting VAT to the Revenue Department if the customer in Thailand is not a VAT registrant. However, under the Amended Act, foreign e-service providers providing services from abroad to non-VAT registered customers in Thailand shall be responsible for filing monthly VAT returns and remitting VAT to the Revenue Department under a pay-only basis without deducting input tax. In some cases, e-platform operators are required to file VAT returns, and pay VAT on behalf of foreign e-service providers if such e-service providers are providing services through a platform with continuous processes starting from offering the service, receiving payment of service and delivering service.

To facilitate taxpayers, the VAT processes such as registration, return filing and payment can be performed electronically through the Revenue Department’s Simplified VAT System for e-Service (SVE) online platform, which is currently under development. Also, foreign e-service providers and e-platform operators are not required to issue a tax invoice to non-VAT registered customers in Thailand or maintain an input tax report under the Revenue Code.

E-service businesses expected to be affected include: (i) online streaming platforms such as YouTube, Twitch, Netflix and Spotify; (ii) e-commerce businesses such as Amazon, Shopee and Lazada; (iii) gaming businesses such as STEAM; and (iv) advertising platforms such as Facebook Ads, Instagram Ads and Line Ads.

The key elements of the Amended Act are as follows.

Definitions of E-Service and E-Platform

The definition of “goods” is amended to exclude intangible property which is delivered through the internet or other electronic networks. There are also new provisions defining the terms “Electronic Service” and “Electronic Platform” as shown below.

Electronic Service refers to services and the intangible property being delivered through the internet or any other electronic network, the nature of which renders their service essentially automated and impossible to ensure in the absence of information technology. Examples of such e-service include online games, mobile applications and online advertising services.

Electronic Platform refers to a market, channel or other processes that many service providers use to provide their service to the service recipients. Such electronic platform can be in the form of websites, mobile applications or any other electronic marketplaces.

New Requirements under the Amended Act

Foreign e-service providers and e-platform operators (excluding those registered in Thailand) with income from providing e-service to non-VAT registered customers in Thailand of more than THB 1.8 million per annum are also required to register as a VAT registrant.

As part of the implementation of VAT on foreign e-services, the Revenue Department will be responsible for the issuance of supplementary regulations and guidelines. Such regulations and guidelines will be in accordance with the current law regarding electronic transactions.

Disclaimer:

This document is of a general nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional advice. No responsibility can be accepted by Blumenthal Richter & Sumet Ltd. for any losses or damages incurred by any person doing anything as a result of this document.

For more information, please contact Sumet Mingmongkolmitr, Senior Partner at Blumenthal Richter & Sumet, at [email protected].