New draft legislation impacting the taxation of the e-commerce industry
KPMG Thailand is preparing a submission as part of the public hearing regarding the proposed draft E-Commerce Act. If you would like to contribute, please click here to provide your comments by 7 July 2017. Your feedback is important and will be taken into account in our submission to the Thai government.
The Thai Revenue Department (TRD) is considering ways to improve and increase revenue collection from businesses operating in e-commerce. In the past few years, the TRD has launched several attempts to include e-commerce business operators into the Thai tax system. To this end, a team was formed to research and evaluate the tax treatment of e-commerce and digital businesses in other countries. In the context of domestic e-commerce transactions, there is no concern since the TRD can effectively detect these transactions and impose the appropriate Thai taxes under the current law. However, in the context of international e-commerce transactions, the current Thai tax regulations do not provide the TRD with an adequate basis to impose Thai taxes since the foreign operators may not have a presence in Thailand under domestic rules.
In June, draft legislation was released and is now in the process of public consultation, following which, the draft will be passed to the National Legislative Assembly for enactment. All public stakeholders are encouraged to submit their comments on the draft legislation, which is open until 11 July 2017. This is a significant development in the Thai legislative process, which until May 2017, did not include a public consultation process.
Unfortunately, the draft legislation raises several unanswered questions, which will hopefully be addressed before enactment, in order to provide industry operators with more certainty on its application.
The key highlights in the draft legislation are summarized below:
It appears that the draft legislation will impact many foreign e-commerce players that are available to Thai market either through Thai corporate income tax, withholding tax and/or VAT. The changes to the corporate income tax provisions extend to foreign companies concluding sales of tangible and intangible goods as well as service related transactions. From a VAT perspective, however, the changes are only aimed at intangible goods and service related transactions since presumably, the current laws of importing tangible goods already provides the TRD with an adequate basis to impose VAT.
We will keep you abreast of any developments on this topic.
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