New international trade and tax rules as well as personal data protections and a test on energy reform will keep the public and private sectors busy next year once they can look to non-pandemic issues.
FREE TRADE BEHEMOTH
After almost eight years of strenuous negotiations, 15 nations in the Asia-Pacific, including Thailand, finally signed the Regional Comprehensive Economic Partnership (RCEP) trade pact, as they concluded the 37th Asean Summit last month.
The RCEP is a proposed free-trade agreement, considered to be the world's largest FTA, between the 10 member states of Asean and five dialogue partners: China, Japan, South Korea, Australia and New Zealand.
The Thai Commerce Ministry is scheduled to propose the deal to the cabinet and request parliamentary ratification within 2021.
The RCEP calls for lower trade barriers on industrial and agricultural goods; regulations on data, intellectual property and e-commerce; and strengthening supply chain connectivity -- all of which could benefit Thailand and the rest of Asean in the post-pandemic world.
In particular, members of the agreement have agreed to champion the needs of small and medium-sized enterprises (SMEs) by providing fairer market access and enhanced transparency in trade. This is important given that more than 90% of businesses across RCEP participating countries are SMEs.
Some analysts said RCEP could put some US companies and multinational companies outside the pact at a disadvantage, while human rights groups are worried the deal could hurt small-scale farmers, cause more land conflicts and leave poorer workers without protections as they struggle to deal with increased competition.
ENERGY REFORM POWERS ON
Thailand is moving towards reform in the power industry, with various projects, including peer-to-peer (P2P) power trade, to be fully tested in 2021.
The new electricity model allows power trade among households or between power plants and homes.
These transactions are currently impossible because the decades-old enhanced single buyer model only allows the Electricity Generating Authority of Thailand (Egat), a power producer and buyer, to sell electricity nationwide.
New energy technologies and progress in renewable energy are prompting the Energy Regulatory Commission (ERC) to consider significant changes to the Thai power industry.
In August 2019, the ERC sandbox scheme was launched, inviting state and private firms to test the new technologies to see whether they can serve new power trade models.
"We've already selected 34 from 100 projects to join the sandbox," said Khomkrit Tantrawanich, the ERC's secretary-general.
"They will have the opportunity to test energy innovations before putting them to use in the real world."
According to ERC, eight companies are interested in the P2P power trade model; nine want to test energy storage system efficiency; and six want to gain know-how for smart grids or distributed power generation systems.
PDPA UNLEASHED
Full enforcement of the Personal Data Protection Act (PDPA) in June 2021 is expected to drastically change the landscape of personal data protection in Thailand for both public and private organisations. Failure to comply could see violators end up being jailed or fined, or both.
The legislation mandates data controllers and processors who use personal data must receive consent from data owners and use data only for expressed purposes.
Putchapong Nodthaisong, deputy permanent secretary for the Digital Economy and Society Ministry (DES), said the appointment of members to the Personal Data Protection Committee is still pending.
Chulalongkorn University helped to draft the subordinate legislation under the PDPA and 17 regulations are being drafted.
Mr Putchapong said some sub-laws are being prioritised, including minimum security standards for the PDPA and the period of time within which data controllers and processors are obliged to inform data owners when incidents happen, such as data breaches.
"Our concern is SMEs, who might be less aware or unprepared for the PDPA," he said.
The DES Ministry and Chulalongkorn University's Faculty of Law have held workshops for data protection officers under the PDPA to boost their knowledge about the law.
"Public hearings on the PDPA's subordinate laws will be carried out in February and March if the outbreak stabilises," said Mr Putchapong.
The PDPA was published in the Royal Gazette in May 2019. It was due to be enforced on May 27, 2020 following a one-year grace period, but the cabinet decided to postpone the enforcement of most parts of the law by another year to give public and private sectors more time to prepare.
ONLINE SERVICE TAXES
In 2021 the e-business tax will become effective, part of the Finance Ministry's tax reform plan to generate sustainable public revenue.
The draft law on the e-business tax passed the first reading in the Office of the Council of State and the details under each section are being deliberated on by the council committee, said Arkhom Termpittayapaisith, the finance minister.
"We have to tell the truth about the government's need for revenue. We need to have a budget to spend to increase the country's competitiveness," said Mr Arkhom.
The e-business tax is intended to create fairness between domestic and foreign entrepreneurs that offer their services through online platforms.
At present, the Revenue Department cannot collect the value-added tax (VAT) from overseas-based business operators because they do not have a permanent establishment in Thailand, thus disqualifying them for VAT liability under Thai law.
Once rolled out, the e-business tax will force overseas business operators offering online services to register for VAT liability with the Revenue Department.
Under the bill, overseas digital platform operators providing services (including online games, sticker downloads, online ads, digital content and online hotel bookings) that generate annual sales of more than 1.8 million baht from Thailand are required to register for VAT payment and are subject to sales taxes.
The department expects revenue of around 4 billion baht from this tax measure.
Some 60 countries have adopted an e-business tax and the majority of online service providers, especially large enterprises, have complied with the tax liability and without a need to impose severe penalties, said Mr Arkhom.
A few countries have used severe penalties, such as shutting down websites of business operators that do not comply with the e-business tax, he said.
Apart from the e-business tax, the Revenue Department plans to push forward the implementation of a draft bill on international information exchange.
At present the department is unable to provider taxpayers' information to third parties in accordance with Section 10 of the Revenue Code to protect personal privacy.
The draft bill allows the exchange of such information for the benefit of taxation.
AMBIGUOUS REVENUES
The full implementation of the long-awaited land and building tax in 2021, which the Fiscal Policy Office (FPO) has been pushing for 25 years, remains ambiguous as economic conditions present a major constraint.
The Finance Ministry has yet to decide on whether to continue reducing taxpayer burden under the land and building tax by 90% for another year, said FPO director-general Kulaya Tantitemit. The reduction was done through a royal decree.
There is still time to deliberate the move as eligible taxpayers of the land and building tax can meet their liability by April 2021, said Ms Kulaya.
The ministry's decision to reduce eligible taxpayers' liability for the land and building tax by 90% in 2020 followed the pandemic crisis that swept the globe, causing higher unemployment and GDP contractions.
The relief has seen local administrations incur losses of a combined 39 billion baht, she said.
Economic conditions in 2021 should determine whether the rate will continue to be reduced for the tax, said Ms Kulaya.
The royal decree was applied for agricultural lands, residential lands, lands for commercial or manufacturing use, and unused lands.
For agricultural lands, the law grants individual owners a three-year tax exemption for 2020-22.
If juristic persons own agricultural lands, they are liable to pay a tax rate of 0.01%. For instance, if the appraisal value is 5 million baht, the tax rate will be 500 baht. With a 90% reduction in place, the tax rate is a mere 50 baht.