The Revenue Department plans to reap 3 billion baht in annual VAT payments from the 80-90 major international online service providers with a presence in Thailand.
These operators do 80-90% of their business online and most have registered for VAT, or an equivalent tax, payments with other countries that collect tax on goods bought and sold online by residents, according to Patricia Monkhonvanit, principle adviser on strategic tax administration.
She believed those operators were also willing to pay value added tax to Thailand, to ensure their record of good governance in running their business is not affected.
On Tuesday, the cabinet approved draft legislation on collecting 7% VAT from foreign vendors and e-commerce platforms buying and selling Thailand.
Those it would affect include overseas providers of online services to users in Thailand such as downloading online games, downloading stickers, online TV, online advertising, online hotel bookings and sales of other digital content, Ms Patricia said.
Under the draft bill, those who sell goods or services on internet platforms and those who operate such platforms are required to pay rhe tax, depending on the form of payment. If buyers pay service fees directly to service providers, the providers must pay VAT to the Revenue Department. If the service fees are paid via platforms, operators of those platforms must pay the VAT.
Foreign online service providers will have to register their tax compliance with the department within 30 days after the law takes effect, she said.
For online hotel reservations, VAT will be based on online hotel booking service fees, not on room rates, Ms Patricia said.
The department expected to collect 3 billion baht annually in VAT payments generated by these online service providers.
Ms Patricia said an OECD study had concluded that about 50 countries now collect VAT from those online service providers.