The fast take up in the rate of online income tax returns in Thailand augurs well for an emerging digital economy. The Thai Revenue Department last month revealed that 400,000 of 700,000 tax payers who filed returns to the end of January were due tax refunds. The tax yield for the last few months of 2018 was up 11% on last year. It comes as it has emerged that Thailand’s proposed new internet tax or levy on larger worldwide online platforms, will not be able to be legislated for by the current parliament. The measure will have to wait for a new Thai government to be formed after the general election on March 24th. Thai authorities are reported however, to be still pursuing the plan.
Thai authorities have revealed that they will now not be legislating for an online tax or levy before a new government comes to power in Bangkok. However, the proposal is being pursued as more of the economy in Thailand moves online. It comes at a time of buoyant tax revenue for the Thai government which, based on the later months of 2018, suggests that yields are up 11% on last year’s figures. For 2019, the Thai Revenue Department is projecting tax receipts of over ฿2 trillion. March is the month when most of Thailand’s 4 million taxpayers submit their returns. This year, 90% of them are expected to do so online. Thailand’s Revenue Department has revealed that of the 700,000 who filed their returns to the end of January, a full 57% are due a tax refund with over half the claims already paid out.
It now looks unlikely that Thailand will get around to introducing a planned new internet tax under the present administration. At the end of January, it was reported that a draft law was unlikely to be passed in the last days of the National Legislative Assembly. The new financial measure would have introduced a tax on online transactions applied to large internet companies with access to the Thai market. It is reported that the bill is still being considered by Thailand’s Council State according to the Director General of the Thai Revenue Department, Ekniti Nitithanprapas. He was quoted by the Bangkok Post.
Thai Internet tax or levy shelved for now
The draft law was drawn up by Thailand’s Ministry of Finance. It was, at one point, considered a key priority by the present government which planned to have it passed through the National legislative Assembly in March in the run up to election day. It has been confirmed however that it has not been scheduled, at this point, for consideration by Thailand’s interim parliament. This means the initiative has been effectively shelved for now until the new government takes the reins after the March 24th election.
Thai authorities will pursue the plan as more economic activity moves online but some voices internationally suggest caution
However, all signs are that the Thai Revenue Department will still pursue the plan. This year, France introduced a similar law and it is thought that more countries will follow suit as the world economy increasingly moves online. However, the Federal government in the United States, at the end of last year, came out against such a move. A recent US Supreme Court decision lifted restrictions on state governments when it comes to internet taxes but many lawmakers in the US are considered to be against any move to intrude into internet use and also what they consider an over complication of the tax system.
Tax targets internet players active in Thailand
In Thailand, the move being proposed for now is very refined and targets specifically large international platforms which access the Thai market. ‘We proposed the draft law more than two years ago. We understand the Council of State is overloaded with a large number of draft bills and cannot deliberate all of them. The department is preparing to propose the law to the next government for consideration,’ the Director General of the Thai Revenue Department said at the end of January on the matter.
Last year, Thailand began addressing the question of online taxes when the Thai cabinet amended the Revenue code to facilitate Value Added Tax collections from internet operators who are based outside of Thailand but conducting business within the kingdom.
Internet firms must have turnover in excess of ฿1.8 million to be subject to the new tax
Under the new proposed law before the Council of State, internet websites or platform operators selling services or subscription including such services as advertising, downloads, online holiday or hotel reservation services will be required to register for Value Added tax in Thailand. This move has already encouraged many worldwide firms to setup Thai subsidiary companies in Thailand to more easily manage and report under the new tax regime. The new rules apply only to companies that have an turnover in excess of ฿1.8 million per annum.
Thailand’s tax receipts are booming reflecting a very healthy and growing Thai economy
The Director General was upbeat about Thailand’s tax yield this year. He revealed that Thailand’s largest tax collection unit managed to bring in an additional ฿22 billion from October to December last year more than projected. This was 7% ahead of target and 11% up on the same period the year before with ฿40 billion more income collected. To put it in perspective, Thailand’s revenue target for 2019 is ฿2 trillion baht. It should be noted that the target set for 2020 is ฿2.16 trillion.
Deadline for income tax returns in Thailand is the end of March with a one week extension for those making online submissions
The deadline for filing income tax tax returns in Thailand is the end of March, a week later if the taxpayer is using the new online channel. Mr Nitithanprapas revealed that 80% of Thai taxpayers now file returns online and it is expected that this figure will be 90% in 2019. In Thailand there are between 10 and 11 million employees or individuals in the workforce who have taxable income. However, only 4 million of these pay any tax at all to the government.
57% of taxpayers who file returns by February in line for tax refunds and half are paid already
The Revenue boss had good news for personal income tax payers in Thailand. Of the 700,000 people in Thailand who had already filed tax returns to the Thai Revenue Department up to the end of January, a staggering 57% will be due a refund this year and over half these have already been paid out by authorities. The Director General advised that taxpayers should use the online system as this is also the fastest way to avail of refunds.