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E-business levy draft bill stuck in limbo

The proposed bill to tax all foreign online sites doing business in Thailand is still under review, and probably will have to be left until after the election.

A draft bill on e-business tax, a levy on foreign-based online platform operators earning income in Thailand, is at risk of not being vetted by lawmakers before the government leaves office.

The draft bill is being deliberated by the Council of State, said permanent secretary for finance Prasong Poontaneat.

The bill should have been on the National Legislative Assembly's (NLA) agenda before Dec 25, 2018 to be vetted by lawmakers before the general election, he said.

The Finance Ministry is considering whether the bill can be squeezed into the NLA's agenda given the poll's delay from the tentative date of Feb 24, said Mr Prasong.

The ministry must have an alternative if the bill is not on the NLA's agenda before the term ends, and push to seek approval from the next government, he said.

The cabinet last year approved an amended Revenue Code related to value-added tax (VAT) collection from e-business operators with a physical presence outside of Thailand.

Under the bill, digital platform operators providing services (including online games, sticker downloads, online advertisements, digital content and online hotel bookings) that generate annual sales of more than 1.8 million baht from Thais are required to register for VAT payment and are liable for the sales tax.

Under a new government, bills drafted under the military-backed government but not approved by the NLA are likely to be tweaked or frozen.

A source at the Finance Ministry said the ministry hopes online platform operators including Facebook, Google, YouTube and Alibaba pay VAT to the Revenue Department, similar to 80-100 operators registered under VAT systems in 50 countries that have the same law.

The 50 countries include Australia, Japan, South Korea, Britain and European nations.

The source said the drafting process of the e-business tax takes years because it requires a time-consuming public hearing process to comply with Section 77 of the charter.

Apart from the e-business tax, two bills related to imposing taxes on foreign-based digital platform operators are waiting the new government's consideration, the source said.

The first is a bill on the revocation of VAT exemption for online purchases of goods worth less than 1,500 baht from vendors outside of Thailand that are shipped by mail, and the second is a bill on imposing income tax on foreign-based digital platforms.

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