Thailand: Cooperation urged in e-commerce tax collection

• Nov 28, 2017

International cooperation is pivotal to collecting e-commerce taxes levied on foreign companies who earn revenue from digital service transactions in Thailand, says a senior official at the Finance Ministry.

Levying online transactions requires an international agreement on which trading processes should be taxed, said Lavaron Saengsanit, the inspector-general who oversees the ministry’s tax reforms. Even the US has found charging e-commerce taxes vexing, he said.

The Revenue Department is preparing to amend the tax code to include e-commerce, aiming to create fairer competition among foreigners and local e-business operators as well as earn billions of baht in foregone tax revenue. The department recently said the amendment will pave the way for financial institutions, which now act as intermediaries for money transfers, to withhold value-added tax (VAT) for online purchases and advertising fees on social media networks, sending it to the Revenue Department.

The amendment will also apply to imported products, as any items priced below 1,500 baht will need to pay VAT.

Mr Lavaron said the Finance Ministry’s tax reform goal has not been completed yet as the revenue code has not been overhauled.

A committee chaired by Somchai Sujjapongse, permanent finance secretary, is handling revenue code reform and has set up working groups with up to 10 members each to hammer out the details, he said. The law will be modified in some areas, said Mr Lavaron.

The amended excise and customs laws have recently gone into force.

Under the amended excise law, the recommended retail price has replaced ex-factory price and cost, insurance and freight values as a base for excise tax computation. The change is aimed at creating a fairer system for manufacturers and importers after some businesses were found to have exploited the value system to understate their tax bills.

The law has also resulted in sugary drinks, cigarettes and most alcoholic beverages seeing excise tax hikes.

Source: https://www.bangkokpost.com/business/news/1368179/cooperation-urged-in-e-commerce-tax-collection