Thailand proposes new tax on digital goods sold by foreign companies

Thailand is the latest country to introduce legislation requiring digital service providers to pay taxes on digital goods, hoping to boost revenue from tech industry giants like Apple, Google, and Amazon.

The taxes are called "value-added taxes" — or VATs for short — and are hardly new. In 2018, Armenia, Belarus, Turkey, Saudi Arabia and United Arab Emirates instated VATs on digital goods, ranging from 5% to 20%. Barbados, Moldova, and Uzbekistan all charge value-added taxes on digital goods as of this year.

Thailand's proposed value-added tax would require tech companies that earn more than 1.8 million baht ($57,434.59) to pay Thailand 7% on any digital goods sold to Thai citizens. The tax could provide as much as 3 billion baht, or $94.72 million, to Thailand's government, according to Reuters.

Digital goods, such as purchases from Apple's App Store, video and music streaming services like Netflix and Spotify, and online game services like Steam and Epic would be affected. It can be assumed that companies like Apple will raise prices on digital services to offset the tax.

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

The VAT bill has yet to be voted on by Thailand's parliament.

"Anyone who makes money from Thai people should pay taxes to the country," Thanawat Malabuppha, president of the Thai e-Commerce Association, told Reuters.

9 Comments

seanismorris 1624 comments · 8 Years

About 4 years ago

I don’t have a problem with it.

The only thing I’d like to have spelled out is what the taxes pay for. I don’t like taxes from different sources to be pooled.

For example, this VAT could go to expanding internet access to poorly served areas, basic internet to the poor, etc.

Money that’s not earmarked for something tends to disappear... Gold toilets anyone?

sflocal 6135 comments · 16 Years

AppleInsider said:

"Anyone who makes money from Thai people should pay taxes to the country," Thanawat Malabuppha, president of the Thai e-Commerce Association, told Reuters.

I just believe in equal treatment. If they're going to tax us for commerce with their people, we should do the same. The U.S. does a lot of business with Vietnam, and I'm sure they would change their tune if we instated the same increase in kind.

austriacus 33 comments · 8 Years

sflocal said:

AppleInsider said:

"Anyone who makes money from Thai people should pay taxes to the country," Thanawat Malabuppha, president of the Thai e-Commerce Association, told Reuters.

I just believe in equal treatment. If they're going to tax us for commerce with their people, we should do the same. The U.S. does a lot of business with Vietnam, and I'm sure they would change their tune if we instated the same increase in kind.

It is totally up to you to for instance charge a value added tax for any sales in your country. If the company has a subsidiary in the US that sells something I assume that they are also subject to federal and/or state taxes. The issue here is that firms that provide digital services or so called platforms often dont have a local foot print or are very adept at shifting profits around (a) arbitrarily asigning IP to the country with the lowest taxes/regulations and then charging high fees to the higher tax countries b) playing around with raw material prices that get shipped around the world so that a low tax country can be assigned one step in the process and then claim the profits there) There are so many ways that governments can never keep up with the loop-holes (or are lobbied which I call payed off not to do it).
In the end the only way to do something about it is to introduce taxes like this. There have been talks about world wide regulations going on for many years but the US has been slow walking it at the behest of companies like Google, FB, Apple and many others.

crowley 10431 comments · 15 Years

sflocal said:

AppleInsider said:

"Anyone who makes money from Thai people should pay taxes to the country," Thanawat Malabuppha, president of the Thai e-Commerce Association, told Reuters.

I just believe in equal treatment. If they're going to tax us for commerce with their people, we should do the same. The U.S. does a lot of business with Vietnam, and I'm sure they would change their tune if we instated the same increase in kind.

Vietnam?

Also, the USA is more than welcome to impose taxes on digital goods from Thailand. Equal treatment.

maestro64 5029 comments · 19 Years

"Anyone who makes money from Thai people should pay taxes to the country," Thanawat Malabuppha, president of the Thai e-Commerce Association,

Actual what he meant to say was any thai citizen who buys digital content needs to pay taxes too its government. Apple is not paying this, the consumer pays. Apple just tacks it on at the end. No company pays these taxes consumers pay.

Keep in mind in the past, consumers paid VAT or sales taxes to cover all infrastructure costs consumers and companies benefited from to get product they just bought to market. This is not true with digital content. Apple and consumers use very little infastruture, if you do it's already covered your internet fees everyone is paying.

Government is collecting a tax for no added benefit.