Thailand Applies VAT on Foreign e-Service and e-Platform (Short Version)

Thailand Applies VAT on Foreign e-Service and e-Platform (Short Version)

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Starting on September 1, 2021, Thailand will be imposing new VAT requirements on foreign e-Service providers and e-Platform operators rendering e-Services to non-VAT clients in Thailand (the “e-Service Amendment”).  The details are explained below.

1). Definition of e-Service and e-Platform

The Thai Revenue Code has been amended to include the following definitions:

  • e-Service is any services or intangible assets that can be transferred via the internet or other electronic networks. In another word, these are such as: downloadable software, gaming application, online advertisement service or online media streaming service (e.g. Genshin Impact, Netflix, Spotify, Facebook Ads or Google Ads).
  • e-Platform is a marketplace, channel or any other means that enable multiple service providers to provide e-Services to clients (e.g. Amazon, Shopee, Google Play or PSN).

2). New VAT Requirements

Under the e-Service Amendment, a foreign e-Service provider or e-Platform operator (excluding those registered in Thailand) with an annual revenue over THB 1,800,000 deriving from e-Service rendered to non-VAT clients in Thailand shall now apply for VAT registration and be liable for VAT payment.

Previously, foreign e-Service providers and e-Platform operators were not responsible for the VAT payment in Thailand. With the new changes, foreign e-Service providers and e-Platform operators will now be responsible for the VAT payment (calculated from output tax only and not allowed to issue tax invoice).

3). To Sum Up

In conclusion, this e-Service Amendment will subject foreign e-Service providers and e-Platform operators to value added tax (VAT) from e-Services provided to non-VAT clients in Thailand.

If your business is considered as an e-Service or e-Platform, you will now be responsible for the VAT payment. In the first instance, e-Service provider bares the VAT burden for all e-Services rendered to non-VAT clients in Thailand made via its own online channel/website. With this being said, if the same e-Service provider offers the services via an e-Platform, the VAT burden will be shifted to that e-Platform operator instead.

This e-Service Amendment is rather new and requires an in-depth understanding of both the tax code and related technology to determine local VAT liabilities. To read an in-depth version of the same article, please click here.

If you have any question or require further assistance on this matter, you are welcome to contact: law@ilct.co.th.

By:

Chart Chotiphol

Counsel/Business Development

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Thailand Applies VAT on Foreign e-Service and e-Platform

Thailand Applies VAT on Foreign e-Service and e-Platform

News & Articles , , , ,

On February 10, 2021, the Thai Government Gazette published an amendment to the Thai Revenue Code subjecting foreign e-Service providers and e-Platform operators rendering e-Service to non-VAT clients in Thailand to value added tax (the “e-Service Amendment”).

The e-Service Amendment added new definitions to the Revenue Code, as well as, imposing new VAT requirements; all of which will become effective on September 1, 2021 onwards. The details are explained below.

1). Key Amendments

First up, the e-Service Amendment included new definitions to the Revenue Code, which are:

  • Goods means tangible and intangible assets, having a value, for sale or other uses, including imported goods, but does not include intangible assets that are transferable or deliverable via the internet or other electronic networks.
  • e-Service means any service, including intangible assets which are transferred/delivered via the internet or other electronic networks, which can be essentially automated, and not achievable without the use of information technology.
  • e-Platform means a marketplace, channel or any other means that enable multiple service providers to provide e-Service to recipients (e.g. Amazon, Shopee, Google Play or PSN).

2). Definition of e-Services and e-Service Providers

In short, this e-Service Amendment re-defined the meaning of e-Service, the key takeaways are:

  • e-Service is any intangible goods that can be delivered/transferred via the internet or other electronic networks, such as: downloadable software, gaming application, films or music.
  • e-Service is any services that can be delivered/transferred via the internet or other electronic networks, such as: online advertisement service or online streaming service.

Under the above definition, examples of e-Service providers are:

  • Downloadable or online gaming services, such as: Genshin Impact, League of Legends: Wild Rifts or World of Warcraft.
  • Downloadable or online media streaming services, such as: Netflix, Disney Plus or Spotify.
  • Online advertisement services such as: Facebook, Line, YouTube or Google Ads.

3). New VAT Requirements

Under this e-Service Amendment, a foreign e-Service provider or e-Platform operator (excluding those registered in Thailand) with an annual revenue over THB 1,800,000 deriving from e-Service rendered to non-VAT clients in Thailand, shall now apply for VAT registration and be liable for VAT payment under the following conditions:

  1. If the client in Thailand is a VAT registrant, the VAT client shall be responsible for VAT payment; or
  2. If the client in Thailand is not a VAT registrant, the foreign e-Service provider or e-Platform operator shall apply for VAT registration and be responsible for the said VAT payment and file a tax return on a monthly basis.

Previously, foreign e-Service providers or e-Platform operators were not responsible for (2). However, with this e-Service Amendment, foreign e-Service providers or e-Platform operators will now be responsible for the VAT payment as specified in (2), with the said VAT payment calculated from output tax only (without deducting input tax), and are not allowed to issue tax invoice(s).

4). Conclusion

In summary, this e-Service Amendment will subject foreign e-Service providers and e-Platform operators to value added tax.

It is important that businesses clearly understand whether they are an e-Service provider or an e-Platform operator, and determine their source of revenue to duly comply with the new VAT requirements. With this being said, the key VAT requirements are:

  • If a foreign e-Service provider renders an e-Service to non-VAT clients in Thailand via its own online channel/website, the said e-Service provider shall be responsible for VAT payment; or
  • If the foreign e-Service provider renders its services via a foreign e-Platform, the foreign e-Platform operator shall be responsible for VAT payment on behalf of that e-Service provider.

This e-Service Amendment is rather new and requires an in-depth understanding of both the tax code and related technology to determine local VAT liabilities. If you have any question or require further assistance on this matter, you are welcome to contact: law@ilct.co.th.

By:

Chart Chotiphol

Counsel/Business Development

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Thailand COVID-19 Related Tax & Relief Policies

Thailand COVID-19 Related Tax & Relief Policies

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As of January 26, 2021, the Thai Cabinet has announced a series of tax and relief policies (“Announcement”) in an effort to ease the ongoing economic impacts from COVID-19. The current Announcement includes three main policies, these include (1) Reduction of Land & Building Tax (2) Reduction on Real Estate Related Fee, and (3) Extension to File Tax Return. Further details are listed below.

(1). Reduction of Land & Building Tax

Land and Building Tax payment for the year 2021 shall be decreased by 90% for the following land types:

  1. Land or building for agricultural purpose;
  2. Land or building for residential purpose;
  3. Land or building for other purposes (excluding 1 and 2);
  4. Vacant/unused land or building.

Moreover, the collection of Land and Building Tax for 2021 has also been extended by an additional 2 months. The original tax payment deadline by April 2021 has now been extended to June 2021.

(2). Reduction on Real Estate Related Fee

The transfer registration fee for real estate has been reduced to 0.01% (from previously 2%) and the mortgage registration fee has been reduced to 0.01% (from previously 1%). The mentioned reduction policies shall be valid until December 31, 2021 and shall be eligible for the following:

  1. The purchase of a new residence, including: land with detached house/semi-detached house/row house or commercial building and condominium unit;
  2. Real estate purchase from land developer or registered condominium operator;
  3. Real estate price that does not exceed THB 3,000,000 per unit.

(3) Extension to File Tax Return

  1. Filing of 2020 personal income tax return (i.e. PND. 90 or PND.91) via e-filing system has been extended to June 30, 2021 (from previously March 2021);
  2. Filing of withholding tax return (i.e. PND. 1, PND.2, PND.3, PND.53 or PND. 54) for January – May 2021 via e-filing system has been extended to the last day of the following month (from previously the 7th of the following month);
  3. Filing of value added tax return (i.e. Por.Por. 30 or Por.Por. 36) for January – May 2021 via e-filing system has been extended to the last day of the following month (from previously the 15th for Por.Por. 30 and the 7th for Por.Por 36 of the following month).

All and all, taxpayers are encouraged to stay up to date with the latest relief policies to ensure the full benefits. We will keep you posted on further relief policies announced by the Thai Government. For further inquiry or assistance, please contact law@ilct.co.th.

By:

Chart Chotiphol

Counsel/Business Development

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Special Tax Deduction & Exemption Schemes

Special Tax Deduction & Exemption Schemes

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As the tax season approaches, the Thai Government has rolled out a series of new tax deduction and exemption schemes for both individual and corporate taxpayers. This is an effort to provide economic relief, as well as to stimulate local economy from the hard-hitting impacts of COVID-19. The tax deduction and exemption schemes are as follows.

(1). Tax Deduction Scheme on Loan Related Interest Payments

Under the current Revenue Code, interest payment(s) of loans for the purpose of rent, lease or construction of residential buildings may be used for the deduction of personal income tax for the year 2021 onwards. To be eligible for this deduction scheme, taxpayers must appropriately present an evidence showing that the loan interest payment(s) had been paid appropriately to the tax authority.

With this being said, an announcement made on 24th December 2020 by Thailand’s Revenue Department (RD) laid down two new regulations to the existing deduction scheme. Stipulated in this new announcement, taxpayers that have made a loan agreement with (1) a bank (2) a finance company, securities company and credit foncier company (3) an insurance company or (4) a secondary mortgage corporation must follow the below regulations: 

  1. For a loan agreement made on or after 1st January 2021 – Taxpayers must declare their intention to apply for the tax deduction scheme to the loan officer for submitting with the tax authority;
  2. For a loan agreement that was made before 1st January 2021 – Taxpayers may choose not to apply for the tax deduction scheme, but still must provide the tax authority with an evidence of loan interest payment issued by the loan officer.

(2). Other Tax Exemption Schemes

Personal Income Tax

Individual taxpayers that have received the benefits from the four governmental programs will be eligible for tax exemption in 2020 and 2021, the mentioned governmental programs are as follows:

  •  Rao-Mai-Ting-Gun (โครงการเราไม่ทิ้งกัน);
  • Tiew-Duai-Gun (โครงการเราเที่ยวด้วยกัน);
  • Kon-La-Krueng (โครงการคนละครึ่ง);
  • KumlungJai (โครงการกำลังใจ).

Corporate Income Tax

Companies may deduct the expenses made on the investment or the service fee of (1) e-Withholding Tax System or (2) e-Tax Invoice & e-Receipt System in the amount of 2 times of the related actual expenses made from 1st January 2020 to 31st December 2022.

Withholding Tax

Tax rate for assessable income (e.g. 3% on service fees, copyright licensing fees or 5% on rental fees etc.) paid via e-Withholding Tax System from 1st October 2020 to 31st December 2022 has now been reduced to 2% tax rate (from the said 3% and 5% tax rates).

Overall, taxpayers are encouraged to pay attention to these deduction and exemption schemes to utilize the benefits to their fullest extent. For any assistance on your tax matters, please contact law@ilct.co.th

By:

Chart Chotiphol

Counsel/Business Development

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