Thailand is in the process of amending the e-transactions law to mandate gigantic internet advertising firms such as Google, YouTube, Facebook, and Line create a legal entity. The move aims to tackle government revenue loss for online advertising, which is estimated to be more than 5 billion baht per year.
"Amendment of the e-transaction law will be proposed to the cabinet within one month before proposing to the National Legislation Assembly. It is expected to become effective by 2018," said Surangkana Wayuparb, executive director of the Electronic Transactions Development Agency.
The new law already passed a public hearing process. It will mandate global internet advertising firms have a legal entity in Thailand, requiring them to pay corporate income tax.
No matter where the revenue payment takes place, they need to pay corporate tax if the purchase happens in Thailand, said Mrs Surangkana. "This is a common practice of governments in many countries trying to solve tax avoidance," she said.
The Digital Adverting Association of Thailand estimated digital advertising in Thailand is worth 12 billion baht in 2017, an increase of 29% from the previous year. The top three digital spending channels this year are Facebook at 3.4 billion baht, YouTube with 1.65 billion and display advertising at 1.3 billion.
Facebook secured 2.8 billion baht of digital advertising spending in 2016, tops in Thailand. Google's search engine received 918 million baht in ads and YouTube received 1.6 billion.