Thailand is implementing digital services VAT from 1 September 2021. Non-resident companies providing online services to customers in Thailand will be liable for 7% VAT. The VAT registration threshold is 1.8 million Baht per annum.
Thai authorities have long noted the need for digital services VAT, finally passing draft legislation in 2020.
The digital services VAT will apply to online audio and video streaming, digital adverts, gaming and other online services.
A level VAT playing field for digital services
The new digital services VAT aims to create a level playing field for Thai companies and overseas businesses providing online services to Thai customers.
Authorities are also aiming to enhance revenue collection. Ekniti Nitithanprapas, Director-General of the Revenue Department of Thailand, expects the new digital services VAT to generate 5 billion baht in the initial year that it takes effect.
The move is in line with global and regional trends. Malaysia and Singapore have implemented tax legislation relating to digital services. In addition, other countries in the region are mooting similar regulations.
Expect the expected
Digital services have become a massive part of the global economy. Authorities around the world are clear about the need to tax digital services. More countries can therefore be expected to impose digital services VAT in the short and medium-term.
At the same time, obligations, definitions and registration thresholds vary from country-to-country. Any businesses providing digital services to customers in Southeast Asia or worldwide should therefore seek total clarity and their current and future obligations.
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