Draft e-service tax passes second hearing

Levy seen generating B5bn in first year

The draft e-service tax, which applies the value-added tax (VAT) to overseas electronic service providers, has passed the committee’s second hearing in the House of Representatives, says the Revenue Department.

The draft law will be deliberated in a third hearing once parliamentary meetings resume, said director-general Ekniti Nitithanprapas.

Once the draft law takes effect, there will be a six-month period for the Revenue Department to prepare tax collection, Mr Ekniti said.

The e-service tax is expected to generate revenue of 5 billion baht in the first year after it takes effect.

The new tax will help create a level playing field for entrepreneurs operating in Thailand who are liable for VAT and operators who are based in overseas territories but operate their services in Thailand, Mr Ekniti said.

Generally, business operators whose annual income is over 1.8 million baht are required to register online for VAT liability.

When this tax policy takes effect, overseas-based operators, who have considerable bargaining power, may either raise their service charges or opt to maintain the existing rates to retain the customer base, Mr Ekniti said.

Separately, the previous tax deduction measures and tax breaks applied to those affected by the Covid-19 crisis have shed revenue worth more than 120 billion baht for the department, he said.

Additional stimulus measures to spur consumer spending through tax rebate of personal income tax are also expected to incur tax revenue losses of about 19 billion baht.

The Revenue Department targets revenue collection of 2.1 trillion baht for fiscal 2021.

The Fiscal Policy Office is deliberating whether to adjust the target of fiscal 2021 revenue collection.

For fiscal 2020, which ended on Sept 30, the Revenue Department reported revenue collection worth 1.83 trillion baht, up slightly from the 1.82-trillionbaht target.

The total was still below the initial target of 2.12 trillion baht.

The draft law will be deliberated in a third hearing once parliamentary meetings resume.

EKNITI NITITHANPRAPAS Director-general, Revenue Department