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New E-Commerce Taxes Proposed in Thailand

Transcript of the above video:

It recently came to my attention not only through the publication I'm going to cite but through various other fora, publications, and individuals that Thailand, or at least the Revenue Department or the authorities, the government here is looking seriously at taxing e-commerce transactions here in the Kingdom. In an article from the Bangkok Post, June the 12th, 2017 entitled "Bid to Tax E-Commerce on Fast track to Reality." It was noted that there's a new draft bill, there's a draft legislation that's heading up to the cabinet for approval and I quote "The draft bill requires financial institutions which now act as intermediaries for money transfer to withhold tax of five percent for online purchases and advertising fees on social media networks and send it to the Revenue Department," said Prasong Poontaneat Director General of the Department. That's the Department of Revenue that we're talking.

The draft bill will authorize the Revenue Department to tax online transactions, advertising fees, social media such as Facebook, Google Line and other activity by other operators such as ride-sharing Uber. And to further quote "transfers by senders to recipients in Thailand will see the five percent withholding tax imposed." This is fairly interesting and is pretty significant. Up to now, Thailand with respect to sort of laws on e-commerce or tax regulations on e-commerce has been something like akin to the Wild West. They're effectively a little oversight, very little regulatory action to go ahead and enforce various tax compliance regimes.

In the United States, it's been my understanding and I'm not really up to speed on what's going on domestically over there with respect to online purchases and taxes but the last time I was there and I practiced sort of posture, it came to my attention that one thing that's sort of the main crux of tax in position on various online transfers, transactions and relationships basically comes from a notion of "nexus of commerce." Where is this sort of nexus of commerce occurring? Thailand's taking in my opinion a very straightforward approach to this which is basically if money that's connected to an online transaction is coming throughout Thailand, then a five percent withholding is going to go ahead and be levied against them?

How this is going to be practically imposed truly remains to be seen. I think we're a long way from seeing this day to day being sort of a normal thing. But I think it's coming down the pipe and with most things that have to do with tax and compliance with tax regulations, I think it's only a matter of time before we see this phenomenon becoming more ubiquitous. So I think it's very safe to assume that at some point in the future, the Revenue Department is going to figure out how best to impose this withholding tax on those who are conducting online transactions. How they are going to impose it and the sort of scope, the regime for imposing these things remains to be seen as of the time of this filming but rest assured, we will be providing updates as things progress with respect to this information.