e-Service Tax: New Law for Online Platforms in Thailand

e-Service Tax: A New Law Online Platform Providers Must Know

Meaning of e-Service Tax
The e-Service Tax is a Value Added Tax (VAT) imposed by Thailand on foreign digital service providers or platforms that sell services to users in Thailand. If their annual revenue exceeds 1.8 million THB, they must register for VAT and remit 7% to the Thai Revenue Department.

In simple terms, if you purchase Facebook ads, subscribe to Netflix, download apps from the App Store, or use cloud services from Google/AWS, a 7% VAT will be added, and the provider must remit it to Thailand.

Origin of the Law
Before 2021, foreign online services were not subject to VAT, putting Thai businesses at a disadvantage.
To address this, the government enacted the Revenue Code Amendment Act (No. 53) B.E. 2564 (2021), effective September 1, 2021.
This aligns with international standards, such as the EU VAT on Digital Services, Singapore GST, and Australias Digital Tax.

• Foreign digital service providers: Netflix, Spotify, Disney+, Facebook, Google, Apple, etc.
• Marketplaces & Platforms: App Store, Google Play, Airbnb, Booking.com
• Cloud / SaaS / e-Learning: Google Workspace, Microsoft 365, AWS, Zoom
• Online Advertising: Facebook Ads, Google Ads

• Register for e-Service VAT through the Revenue Departments online system
• File monthly VAT returns (e-Filing) and remit VAT
• Input tax credits cannot be claimed; VAT must be paid in full

• Higher advertising/software costs: For example, Facebook Ads previously at 10,000 THB now cost 10,700 THB.
• Consumers pay more: Netflix and Spotify raised subscription prices to include VAT.
• Improved competitiveness: Thai businesses gain an advantage, as foreign providers can no longer sell at lower prices without VAT.
• Accounting and legal considerations: Thai companies purchasing services should verify VAT documents for accounting records and expense deductions.

• Study and plan for an additional 7% VAT in cost structures
• Check whether invoices from foreign providers already include VAT
• Clearly define product/service pricing on your platform (VAT included or not)
• Draft contracts with foreign partners/platforms specifying tax responsibilities
• If you sell services abroad, review the e-Service Tax requirements of those countries

Conclusion
The e-Service Tax is a modern digital tax law that promotes fair competition and increases government revenue from the digital economy. In practice, however, platform operators and Thai businesses must prepare budgets for the 7% VAT, review tax invoices, and adjust pricing strategies to remain competitive.

Real-World Example
Thai Startup: Aroma Café Online
This company sells coffee online and uses Facebook Ads to promote its products.
Originally, Aroma Café Online paid 100,000 THB per month to Facebook for advertising.
After the implementation of the e-Service Tax, Facebook must add 7% VAT.
Thus, the companys new expense = 100,000 + 7,000 = 107,000 THB/month.

• Marketing costs increase; without strategic adjustments, profits may decline.
• The advertising budget must be re-planned, e.g., reducing the number of campaigns or optimizing targets for better returns.
• From an accounting perspective, the company must obtain VAT documents from Facebook as supporting evidence for bookkeeping.

• Platform operators and Thai entrepreneurs must always factor in the 7% VAT when purchasing digital services from abroad.
• ROI of advertising campaigns should be recalculated after including VAT.
• If costs become too high, businesses may need to consider alternative or supplementary marketing channels.

Relevant Sections of Law for the e-Service Tax

The e-Service Tax is primarily governed under the Revenue Code concerning Value Added Tax (VAT), with the following key amendments:

Section 77/1 (17), (19)
Provides new definitions of electronic services, platforms, and foreign service providers.
This ensures that digital services delivered via the internet are subject to VAT.
Sections 77/2 and 77/3
Requires operators outside Thailand who provide electronic services to Thai consumers to register for VAT if their annual revenue exceeds 1.8 million THB.
Section 83/6
Specifies the filing and tax payment obligations of foreign electronic service providers through the Revenue Departments e-Service system.
It also states that foreign operators registered under the e-Service VAT system cannot claim input tax credits (must pay VAT in full).
Section 80/1 (5)
Expands VAT liability to include foreign electronic services, treating them the same as goods or services supplied domestically.

Summary
The e-Service Tax law is based on the Revenue Code, Sections 77/1, 77/2, 77/3, 80/1, and 83/6, as amended by the Revenue Code Amendment Act (No. 53) B.E. 2564 (2021).