E-payment tax to take effect in 2020
Time needed to link Revenue Department and bank systems
The e-payment law, a tool for the Revenue Department to tax the income of non-salaried earners, particularly online vendors, will go into force from Jan 1, 2020.
It takes time to link systems between the Revenue Department and financial institutions, so the money transfer reporting requirement will be implemented in early 2020, said department spokesman Pinsai Suraswadi.
In the event that the Revenue Department spots non-salaried income, earners are subject to a tax for which they have two options: bulk payment of 0.5% of the income, or a personal income tax with five brackets in a range of 5-35%, whichever is higher, Mr Pinsai said.
Most freelancers and online sellers are required to pay tax based on bulk income, he said, adding that non-salaried workers who earn 2 million baht a year, which is required to be reported by banks to the Revenue Department, are subject to an income tax of 10,000 baht.
Non-salaried earners who are required to pay income after the enforcement of the e-payment tax must file a tax return for the 2020 tax year during January to March 2021, Mr Pinsai said.
According to the law, each financial institution will be required to report transactions of customer accounts that receive either more than 3,000 money transfers a year or at least 400 money transfers with a total value of at least 2 million baht a year to the Revenue Department.
Mr Pinsai said the tax-collecting agency is discussing with banks how to identify deposits made by account owners and co-signers of bank accounts.
The law is not aimed just at those who sell products and services online, as they in fact are subject to income tax in accordance with the Revenue Code, he said.
The entire amount of money transferred to bank accounts is not liable for tax payment, as some of it is not income, he said, adding that the Revenue Department will use the money transfer transaction reports to determine whether the account owner is subject to any tax.
Mr Pinsai said the e-payment tax is in tune with the policy to encourage people to move towards a cashless society.
The law would rather widen opportunity for operators who pay tax correctly and in a transparent manner to access sources of funding and loans, he said.
“I don’t want operators to be too worried, as such information [banking transaction reports] is just an element that the Revenue Department uses to classify risk of tax payment [avoidance],” Mr Pinsai said. “Banks will send us only names, surnames and numbers of money transfers, they won’t dive deep into details.”
He recommended that those who have low risk file a tax return. For those who are categorised in the high-risk group, the Revenue Department will summon them for talks so they don’t avoid tax payments.
The e-payment law is aimed at facilitating taxpayers, Mr Pinsai said.
For instance, those who are subject to the withholding tax will no longer need to seek a tax document from those who withhold the tax to submit to the Revenue Department.