The cabinet has approved on Tuesday the drafting of a bill that would allow for the tax collection of foreign digital platforms. The measure was proposed by the Ministry of Finance (MOF).
If the bill is passed, the dubbed “E-Service Act” would start collecting tax from foreign digital platforms that do not have a Thai subsidiary. This includes platforms that provide online music, movies, games, stickers, advertisement and hotel booking.
The MOF estimated that the collection will add at least 3 billion baht into the government’s coffer per year.
The draft, however, will first have to be approved by parliament and the senate before being passed as a law.
As revealed by the Revenue Department in April, foreign digital platforms are making at least 1.8 million baht per year in Thailand. If passed, they will have to pay value-added tax (VAT) and be liable for sales tax.
Deputy government spokeswoman Ratchada Thanadirek said that this new tax bill will not affect Thai consumers.
Ratchada added that Australian and South Korean governments have already started to collect such e-business taxes.
Director-general Ekniti Nitithanprapas said the MOF could also add withholding tax to the draft legislation. He said that the law will provide the department with tools to prevent online vendors from avoiding income tax payment.
Other cabinet approvals
Government spokesperson Naruemon Pinyosinwat said the cabinet has also approved the exemption of hotel operating fees, worth 40 baht per room, for one year.
The exemption of the fee on 783,855 rooms would help hotels but the government would lose 31.35 billion baht in terms of income.
The exemption will run from July 1 until June 30, 2021.
Naruemon also said that the cabinet has approved measures to help 200,000 sugarcane farmers who have been affected by the ongoing drought and to discourage them from burning up their farmland to prevent air pollution.
The measures have a total budget of 10 billion baht. They are expected to help lower the cost of production for sugarcane farmers as they are now suffering from a nearly 25-ton drop in annual production.
The previous estimation that the country will be able to produce 100 million tons of sugarcane in 2020 is now down to 74.89 million tons. Costs of production have also increased due to a shortage of water, from 1,110 baht per ton to 1,419 baht per ton.
