Taxing internet firms gets first green light

Taxing internet firms gets first green light

This file combination of pictures created on July 10, 2019 shows the logos of Big Tech. (AFP photo)
This file combination of pictures created on July 10, 2019 shows the logos of Big Tech. (AFP photo)

The cabinet has approved a draft bill requiring foreign digital service providers to pay a value-added tax (VAT), making Thailand the latest country in Southeast Asia to seek to boost tax revenue from international technology companies.

Last month, Indonesia passed a law requiring big internet companies to pay VAT on sales of digital products and services from July, and in the Philippines a lawmaker introduced a similar bill in parliament to tax digital services.

The Thai bill, which still has to be voted on by Parliament, requires non-resident companies or platforms that earn more than 1.8 million baht per year from providing digital services in the country to pay a 7% VAT on sales, deputy government spokeswoman Ratchada Thanadirek told reporters.

Thailand is expected to add about 3 billion baht to its coffers annually from the move, which will affect services such as music and video streaming, gaming, and hotel booking, she added, without naming any companies.

"These businesses would've had to pay VAT if they had been Thai, which is unfair," Ms Ratchada said.

Thailand has mulled taxing digital businesses for years, hoping to tap the country's internet economy, one of the fastest-growing in the region.

Thanawat Malabuppha, president of the Thai e-Commerce Association, told Reuters he welcomed the move, as it will help level the playing field for rival Thai businesses.

"Anyone who makes money from Thai people should pay taxes to the country," he said.

Analysts say the Covid-19 pandemic has accentuated a push by governments around the world to tax internet companies, who could see a boost in revenue as people stay at home during global lockdowns.

Nearly 140 countries from the Organisation for Economic Cooperation and Development (OECD) are negotiating the first major rewriting of tax rules to take better account of the rise of big IT companies such as Amazon, Facebook, Apple and Google.

Southeast Asian regulators held talks last year on a region-wide effort to tax tech giants more, while industry groups have warned that over-regulation could blunt the region's booming digital economy.

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