How to Navigate Thailand's New Tax Requirements for Sales of Digital Products and Services -
The government of the country has recently released guidelines that mandate companies offering electronic services - -selecting digital goods and services -- to register for VAT if they meet certain criteria and requirements.
In the following section, we'll go over the information you require to learn about Thailand's taxes on the sales of digital goods, as well as services.
- Foreign e-services provider requirements
- What are Thailand's rates of VAT on E-Services?
- Do I have to be VAT registered in Thailand?
- What is the best way to sign up to be VAT registered in Thailand
- The list of VAT penalties that might be imposed
New requirements that apply to foreign businesses offering electronic services
The 1st of September, 2021 Thailand extended its VAT law to encompass the sales of digital products as well as services (e-services) which are supplied by non-resident businesses for Thai customers. In the past, this kind of company did not have to be registered to register for VAT.
To monitor compliance with the tax regime. To check the compliance of this new tax rules, it is the Thai Revenue Department is maintaining a public database of companies who are not residents and are VAT registered.
Thailand recently published a guide that provides information on a variety of aspects of compliance such as the submission of VAT and the payment, the validation of VAT numbers and utilizing Foreign Exchange (FX) and other sources.
There are some phrases in the manual which deserve to be defined:
- Electronic services:Includes non-physical products delivered via the internet or other electronic network in an automated method that is impossible to guarantee without the use of IT (i.e. online games, web-based and mobile applications, and software).
- Digital Platforms: Every market technique, or procedure which digital service providers employ in order to offer services to clients. These platforms are facilitators for the service provider and their clients and aid in facilitating the transactions between these two parties.
- Simple VAT System E-Service (SVE):The electronic system Thai's Revenue Department offers service providers and online platforms that allow you to sign up as VAT payers, file VAT tax returns, paying VAT, and apply for VAT refund electronically.
Find out more information about Thailand's VAT rates on Electronic Services in the official Guide.
What are Thailand's VAT rate for Electronic Services?
| Rate | Type | Liste of Goods and Services |
|---|---|---|
| 7% | Standard | Videos, music and online games game, video, digital advertisements, mobile applications Pre-recorded online courses and commissions to intermediary firms Digital images, financial data, web hosting search engines, streaming on demand catalogs, electronic marketplaces |
| 0% | Exempt | Ebooks, live teaching services transfers, payments facilitation service, telecommunications services that involve human interaction Electronic vouchers |
For calculating your VAT value to calculate your VAT value, simply multiply the amount of service by Thai Baht by 7 percent of the VAT rate.
Find out more about the rate of VAT in Thailand for Electronic Service (VES) via the official Thailand Revenue Department website.
Do I need to sign up to be VAT registered in Thailand?
If you provide electronic services to non-VAT or VAT-registered person for example, consumers or a small non-registered companies, you'll need be registered with VAT if your taxable service is greater than 1.8 million Thai Baht (approximately $55,800 USD) in a calendar year.
businesses that aren't residents of Thailand are required to sign up and make VAT payments in Thailand in the event that they satisfy the following conditions:
- Deliver e-services and receive payment and provide other services via an electronic platform from abroad.
- The web-based service is accessed in Thailand by clients who do not have VAT registration.
- Revenue from e-services exceeds 1.8 million baht in the accounting timeframe.
Refer to the Key Elements section of the manual for further details.
How do I register with VAT in Thailand
sellers don't need to worry about registering for VAT as well as the method of collecting, calculating or filing tax returns for Thailand as we manage it on their behalf.
If you're not using it for tax management, we'd suggest that you read the guidelines provided by Thailand's Revenue Department. This is a list of information that will guide your in the right direction:
- Electronic and other electronic service providers in other countries as well as platforms can register for VAT online using the SVE available on the Revenue Department's website.
- The VAT registration form should be filed separately by each company. If you operate multiple branches or subsidiaries, each company that is able to meet the legal requirements for registering VAT separately must file by using SVE.
For more information on VAT registration, take a look at the entire VAT registration guide. Electronic Services (VES) Registration Guide.
Possible VAT penalty list
Below is a list of consequences your company might be liable to when it doesn't comply with VAT regulations in Thailand.
Civil Penalties
| Infractions | Fines/ Penalties |
|---|---|
| Business operations that are not VAT registered | A penalty of twice the amount due during tax month during the period of inability to comply with the law, or 1000 Baht each month, whichever is more. |
| In the event of a VAT return being filed late, it can cause problems for taxpayers. return | The tax is twice as high. to be paid in a tax month |
| Tax returns that aren't correctly filed may alter the tax to be paid | The amount of tax to be imposed is the amount of tax |
Criminal Penalties
| Offenders | Penalties Fines |
|---|---|
| The failure to declare VAT and conducting business without VAT registration | A sentence of confinement that is not more than a month or fine of not more than 5 000 Baht or both. |
| Tax returns for VAT that are not filed | An amount of fine not exceeding 2 000 Baht |
| Failing report VAT as prescribed by the Director-General | A term of imprisonment not greater than 6 months, or a fine that is not greater than 10,000 Baht or both. |
| Aim to avoid VAT or otherwise avoid VAT, issuing tax bill or debit note without the authorization | A sentence of three months to seven years, and a penalty of 2 000 Baht and up to 200000 Baht |
Tax liability can be taken on
Our tax experts work around the clock to be up to date regarding changes to tax laws as well as work with specialists from outside to ensure your business is safe and compliant.
- Offloads your tax liabilities
- The calculation of tax is automatically done when you check out.
- Pays taxes globally on your behalf
- Manages the complete tax compliance procedure
- Assistance with tax-exempted orders
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