On 10 February 2021, the Act Amending the Revenue Code (No. 53) (“Amendment”) was promulgated in the Government Gazette. Under its provisions, foreign businesses providing e-Services to non-VAT registered users in Thailand are responsible for remitting VAT to the Revenue Department (RD). The Amendment took effect the day following its publication. Provisions regarding VAT return filing and payment will be enforced from 1 September 2021 onwards.
Definitions
The Amendment revises the definition for “goods” under Section 77/1 (9) of the Revenue Code to exclude e-Services (“intangible assets that are delivered through internet systems or other electronic means”), and adds the following definitions for “electronic service” and “electronic platform”:
“Electronic service” is defined as “a service which includes intangible assets delivered through internet systems or other electronic means, in which the nature of the service is automatic, and in which the service cannot be performed without information technology.”
An “electronic platform” is “a market, channel or any other process that multiple service providers use to provide electronic services.”
Impact on foreign providers of e-Services and e-Platforms
Businesses providing e-Services from abroad to users in Thailand who are not VAT registrants are required to register for VAT, if their income exceeds 1.8 million baht per annum. Such foreign businesses are liable for filing and remitting output VAT to the RD on a monthly basis. Input VAT deductions are not permitted.
However, when foreign businesses provide e-Services through e-Platforms (which support a continuous process for the provision of services, payment, the delivery of services, and other actions to be prescribed by the RD), the operator of the e-Platform will be liable for filing and remitting VAT on behalf of all foreign e-Service providers.
Foreign e-Service or e-Platform providers may not issue Thai tax invoices to non-VAT registered users in Thailand.
Under the Amendment, all tax-related documents, such as tax return forms, payments, reports, and other documents required to be sent to the RD may be submitted electronically. As such, VAT registration, VAT return filings, and payments will all be performed online via the Revenue Department’s “Simplified VAT System,” which is currently under development.
Processes and requirements outlined by the Amendment are expected to be elaborated upon by the RD in future announcements. Foreign businesses which may reasonably expect to be affected by the new provisions should assess their readiness to comply with the new regulations.