Thailand: Digital services tax 2021

VAT on electronic services to be collected starting September 2021.

The new VAT rules were posted in the Royal Gazette and will be effective in September. The General Director of the Revenue department of Thailand Ekniti Nitithanprapas confirmed that most foreign online businesses offering electronic services are cooperating with the new law and they plan to register for VAT in Thailand.

What will change in Thailand in regard to VAT for digital service providers in 2021?

• Foreign businesses that provide their services to consumers in the territory of Thailand must register for VAT, collect and remit VAT to the Thai tax authorities.
• This will be imposed on non-resident providers and marketplaces facilitating the sale of these services.  As a result, if the digital service provider offers their services via an electronic platform or online marketplace that handles all aspects of the supply of these digital services, then the marketplace platform operator has the responsibility to collect and pay VAT to the Thai tax authorities on behalf of the digital service provider.
• The rate of the new digital services tax in Thailand for 2021 will be 7%.
• VAT registration threshold will be around 60.000 USD per annum.

What is considered an electronic service?

As electronic services, the definition considers services, including intangible assets, that are automatically transmitted via the internet or other electronic network, and which could not be rendered without such technology. Services that are offered as a download such as games, movies, brokerage services etc.

What is considered an electronic platform?

As an electronic platform, the definition considers any channel used by numerous operators to provide electronic services to their service recipients.

Thailand is following the trend of digital services taxation as we have seen many countries recently do. Having moved into this new era of cross-border offering of mass streaming services such as video and music, countries one by one find this option of digital service taxation more appealing and a way to increase their revenue from taxes while supporting their local providers of such services.

These last year the pandemic boosted the revenue of these online services offered and customers shifted to online platforms. As a result the Thailand Tax Department expects tax revenue collection from the upcoming e-services tax to amount to more than 5 billion baht per year!

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Last updated 28/07/2021