The Thai Revenue Department (TRD) has issued its comments addressing key issues raised by potentially impacted foreign e-commerce operators and platforms during the third public hearing that was conducted in early January 2020 on the third draft of the proposed e-commerce indirect tax law.
Briefly, the third draft of the e-commerce legislative amendments that was released on 14 January 2020 proposed that a foreign company providing electronic services to a non-VAT registered person, and where the services are used in Thailand, must register and will be subject to 7% VAT in Thailand if its annual VAT-able income exceeds Thai Baht 1.8 million. This rule also applies to the owner of electronic platforms that are used by the said foreign companies to provide electronic services. Please refer to our previous Tax & Legal News Flash on this topic here.
Although the third draft of the law provided some clarity, certain concerns raised in the second public hearing, specifically regarding the practical application and certain compliance obligations to be imposed on foreign operators and platforms remained unclear.
During the public hearing on the third draft of the law that was open until 29 January 2020, some potentially impacted foreign e-commerce operators and platforms submitted their comments online to the Thai government raising some of these issues for the TRD’s consideration. The TRD also initiated and hosted several face-to-face meetings with some foreign e-commerce operators and platforms to discuss the draft and receive their feedback. The TRD has now published their responses to the comments received from the public.
As several elements of the proposed e-commerce law including the implementation and compliance obligations are still under consideration and development of the TRD and the relevant authorities, there is no significant clarification provided by the released comments. Further clarifications are expected to be released as guidelines for tax officers after enactment of the proposed e-commerce law.
KPMG is at the forefront of the developments on this subject and will be pleased to discuss the potential impact of these proposed amendments to your business.