RSM Focus – Newsletter for February 2022

RSM Accounting Services Thailand

By Amornrat Sae-Liw, Senior Accounting Manager

 

e-Service

Electronic Service Provider Act abroad for domestic service recipients. The Revenue Code Amendment Act (No.53) B.E.2564. It is an Act approved by the Cabinet and announced in the Government Gazette on February 10, 2021 but this new tax law has been enforced on September 1, 2021 and onwards.

Background

Advances in technology have resulted in a change in the form of service delivery. Overseas operators can provide services to individuals through the Internet, including a platform which acts as an intermediary link between service providers, which makes it possible for the general public to access electronic services such as games, music, movies from foreign operators easily, conveniently and quickly.

In 2020, Thailand had a population of over 69 million people and a high internet access rate of 75%.  A survey of GlobalWebIndex (“GWI”) found that more than 50% of the Thai population aged 16-64 watched videos, listened to music and to online radio.  Online music trading grew by 9% and video game trading grew by 7.8% while online advertising grew by 16% when compared to the previous year.

Accumulated problems caused unfairness

In the past, entrepreneurs in countries that have provided e-Services located in a foreign country to consumers located in Thailand did not have to register for VAT or file VAT returns and make payments.  This resulted in disadvantages for Thai businesses who were required to register for VAT in Thailand and in foreign countries where their services were asdfssused.paye time

VAT in Thailand and also in foreign countries where their services were provided and used.

International standard solution

A number of countries jointly formulated a solution to the problem by following the OECD’s recommendations that foreign operators shall complete an Electronic Platform Foreign VAT registration.  More than 60 countries have introduced amended VAT laws in accordance with these recommendations.

What Kind of businesses are affected?

The new law stipulates that foreign electronic service providers and electronic platforms which receive income of more than 1.8 million baht per year from providing electronic services to non-VAT registered customers in the country are obliged to register for VAT, file VAT returns and pay VAT by calculating output tax. According to the Finance Ministry, e-services subject to this legislation include e-commerce platforms, online advertising, online accommodation booking, online music and film streaming, online games and applications.

Examples of electronic services subject to the e-Service Tax in Thailand  

  1. Digital products such as mobile applications;                        
  2. Software programs;
  3. Digital images, Videos, and financial data;
  4. Digital music, films, and games;
  5. Distance learning via a pre-recorded medium such as online courses;
  6. Electronic data management such as website supply, web-hosting, automated and digital maintenance of programs;
  7. Providing or supporting a business or personal presence on an electronic network;
  8. Search engines such as customized search-engine services;
  9. Listing services for the right to put goods or services for sale on an online market or auction house;
  10. Advertising services on an intangible media platform;
  11. Support services performed, via electronic means, for arranging and facilitating the completion of transactions, which may not be digital in nature such as commission fees to intermediaries, service fees to consumers and merchants for sale of products through the electronic marketplace.

Vat Registration Website for Non-resident Businesses

This is completed via the Revenue Department’s VAT for Electronic Service (VES) system: https://eservice.rd.go.th/rd-ves-web/landing (please find the instruction here)

This guide provides detailed information about VAT on electronic services provided to non-VAT registrants in Thailand by non-resident business persons under the Revenue Code, with effect from 1 September, 2021.  The guide covers:

  1. Scope of VAT on Electronics Services
  2. Key Elements
  3. VAT registration
  4. VAT Filings and Payments
  5. Output Tax reports
  6. VAT refunds
  7. Compliance and Enforcement
  8. Others
  9. Frequently Asked Questions(FAQs)
  10. Further information 

Resource: https://www.rd.go.th

This article was put together by Khun Amornrat Sae-Liw, Senior Accounting Manager at RSM Accounting Firm in Thailand. Should readers of RSM Focus wish to learn more about accounting in Thailand or alternatively require accounting, taxation or payroll consulting advice, please contact us on [email protected] or (02) 670 9002.