Thailand studying tighter tax collection rules for IT firms

BANGKOK/JAKARTA: Thailand is studying plans to toughen tax collection rules for internet and technology firms like Alphabet Inc’s Google, the head of the Revenue Department told Reuters, as the tax affairs of these firms comes under growing scrutiny in Southeast Asia.

The plans would also cover the mobile transfers and internet payment sector, Prasong Poontaneat, director general of Thailand’s Revenue Department, told Reuters.

Thailand is focused on changing existing regulations, Prasong said, adding that a working committee had been set up to find solutions on tax collection for companies such as Google and other technology firms.

“We are studying this issue and have set up a committee to look into this over the past two months,” Prasong told Reuters.

“The idea is to seek appropriate solutions for Thailand and it could involve an amendment in some regulations because current laws are outdated and have been used for more than 50 years,” said Prasong, adding that he expects the committee to come up with solutions by the end of this year.

Reuters telephoned and e-mailed Google Thailand for comment, but there was no immediate reply. Google Asia Pacific’s spokesman did not immediately respond to an email and a phone call seeking comment.

Indonesia is pursuing Alphabet Inc’s Google for five years of back taxes, and the US search giant could face a bill of more than US$400 million (RM1.65 billion) for 2015 alone if it is found to have avoided payments, a senior tax official told Reuters last week.

Singapore’s low tax regime and its generous tax incentive programmes make it a big draw for multinationals like Apple Inc, Microsoft Corp to Google, and also from other sectors, to employ regional teams there.

They justify booking large revenue and profits in Singapore as they usually run main business functions such as finance and operations, hold intellectual property rights there or base regional executives in the city state.

Singapore’s finance ministry said in an emailed statement last week that “profits should be taxed where activities giving rise to the profits are performed and where value is created” and that it does not condone the “artificial shifting of profits”.